I have to admit that I share your scepticism about being able to model NVIDIA. There are simply too many factors that can skew the models.
Demand shift from Cloud Providers, competition, TSMC blow up risk (or even temporary blocks), recession leading to a general slowdown for a couple of years on many levels.
All in all, I simply won't touch this without a huge margin of safety.
Just found your substack and spent an and hour or two enjoyably ingesting this 4-part series on Nvidia. A really fine and thorough effort. You should be commended for the research and the obvious attention to detail you put into it. Really magnificent.
I am a very long term investor, since the early 2000s. By way of critique, I have only one on your perspective in investing in this company and that's of traditional valuations. The shortcoming of DCF models are pretty clear in that your projected 5 year $175 price target has basically been achieved in 6 weeks after you published it. I am not saying traditional valuations are bad and that they shouldn't be used. In fact, they should for most companies. All I am saying is they do have limitations, for example, if someone bought the day this article was published, and put in a limit sell just under your target, they'd be out of the position already. It's ironic that it took more time to get these 4 articles out than the 5 yr price target your model produced.
What your articles have done is elucidated a wonderful story on Nvidia. It's a story stock and has been for some time. It's a story of a founder with a vision, 3 decades in and still at the tiller. A guy driven. A bunch of near misses. A deft long term strategy and nimbleness to nurture, to pivot, and to persevere in the face of a dynamic and challenging environment. Nvidia has put it's hands around the opportunity of our lifetimes, the next technological revolution, similar to how Intel and Microsoft seized the PC marketplace in the 1990s, commonly referred to as "wintel," except Nvidia controls both the hardware and the software side of the equation. I'm not sure how that is quantified in a DCF model.
Having been invested for nearly two decades based primarily on my belief in the CEO, the one thing I know for sure is that this company's valuations will remain stretched beyond traditional valuations for a long time to come. Investors should just park what ever money they're comfortable with and not look at it for 5 or 10 years, a bottom drawer stock, forget about it. Jensen is incredibly smart and ruthless, and he has created incredibly high barriers for competitors.
Hi Punch Card, just found your Substack and I find your viewpoints on companies like SEA interesting. Currently a student in a local Singapore university, trying to break into the PE space. I’m interested in hearing more about your experience. Any chance we could connect off this platform?
40% YoY in data center for next year seems aggressive no? I have been struggling to model out the best way to solve for data center outside of using these pie in the sky TAM CAGR projections. Do you think we need to go through a digestion phase? Any other ideas on how to model data center growth more accurately?
Thanks for the article. Read all 4. Enjoyed it so much. Merry Christmas!
Thanks for the work.
I have to admit that I share your scepticism about being able to model NVIDIA. There are simply too many factors that can skew the models.
Demand shift from Cloud Providers, competition, TSMC blow up risk (or even temporary blocks), recession leading to a general slowdown for a couple of years on many levels.
All in all, I simply won't touch this without a huge margin of safety.
PunchCard,
Just found your substack and spent an and hour or two enjoyably ingesting this 4-part series on Nvidia. A really fine and thorough effort. You should be commended for the research and the obvious attention to detail you put into it. Really magnificent.
I am a very long term investor, since the early 2000s. By way of critique, I have only one on your perspective in investing in this company and that's of traditional valuations. The shortcoming of DCF models are pretty clear in that your projected 5 year $175 price target has basically been achieved in 6 weeks after you published it. I am not saying traditional valuations are bad and that they shouldn't be used. In fact, they should for most companies. All I am saying is they do have limitations, for example, if someone bought the day this article was published, and put in a limit sell just under your target, they'd be out of the position already. It's ironic that it took more time to get these 4 articles out than the 5 yr price target your model produced.
What your articles have done is elucidated a wonderful story on Nvidia. It's a story stock and has been for some time. It's a story of a founder with a vision, 3 decades in and still at the tiller. A guy driven. A bunch of near misses. A deft long term strategy and nimbleness to nurture, to pivot, and to persevere in the face of a dynamic and challenging environment. Nvidia has put it's hands around the opportunity of our lifetimes, the next technological revolution, similar to how Intel and Microsoft seized the PC marketplace in the 1990s, commonly referred to as "wintel," except Nvidia controls both the hardware and the software side of the equation. I'm not sure how that is quantified in a DCF model.
Having been invested for nearly two decades based primarily on my belief in the CEO, the one thing I know for sure is that this company's valuations will remain stretched beyond traditional valuations for a long time to come. Investors should just park what ever money they're comfortable with and not look at it for 5 or 10 years, a bottom drawer stock, forget about it. Jensen is incredibly smart and ruthless, and he has created incredibly high barriers for competitors.
Hi punch card! Really enjoyed this write-up! Would also love to get a copy of the model to dive deeper into the numbers! Jc_1336@yahoo.com
Thanks!!
Hi Punch Card, could you also share the model with me? My email is dgray16@hotmail.com. Much appreciated!
Hi Punch Card, can u share your model with me too? my email is irene_lye@hotmail.com.. thank you very much
Great analysis! Love the visuals & impressive model -- would love a chance to check out the model & talk more offline --> ramsey@babbl.dev
Cheers!
Hi Punch Card, just found your Substack and I find your viewpoints on companies like SEA interesting. Currently a student in a local Singapore university, trying to break into the PE space. I’m interested in hearing more about your experience. Any chance we could connect off this platform?
40% YoY in data center for next year seems aggressive no? I have been struggling to model out the best way to solve for data center outside of using these pie in the sky TAM CAGR projections. Do you think we need to go through a digestion phase? Any other ideas on how to model data center growth more accurately?
Thank you @punch card investor...appreciate !
Do you share the Excel models?