My other Nvidia post got a lot of traction, so I thought I’d continue the Nvidia party. there’s been a lot of talk comparing them to Cisco back in the .com era.
I lived through .com era and it was vastly different. If you said you were an online mall, you could get $1 billion the next day. Because people understood malls and this Internet thing was going to raise all roofs.
Pets.com? I know what a pet is..com makes it even better!
I remember the exact street I was driving on when the one trillionth radio advertisement for Amazon came on the radio. And I was like, what a stupid name for a bookstore. Amazon has nothing to do with books. And for years and years and years, Amazon, lost money. They only existed because that.com Bubble had lifted them so far they had Cash. Lotsa cash. But they were a joke for about a decade.
But the real big thing was almost none of those companies had a profit. They didn’t make any money whatsoever. None. No business. They were burning through cash with expensive offices, expensive staff, oh man, salaries for tech workers were astronomical.
The companies that did have a profit, we’re making pennies. Or there profit margins were incredibly slim. There were only handfuls of companies that were catapulted by the bubble that didn’t meet this criteria.
Cisco was in a similar situation to Nvidia. Cisco built the tools that would enable this tremendous new technology. but their net profit margin was like 17%. Vastly less than nvidias. Nvidia forward p/e is 54. Ciscos was 150.
If it’s a bubble, it’s nowhere near the size of the.com bubble. S&P 500 is P/E of 22. In 2000 it was 28.
From MarketWatch.
Among the record-setting elements of Nvidia’s NVDA stunning fiscal fourth quarter was its 76% GAAP gross margin, which was up from 66% a year before. Nvidia forecasts that margin will remain around the same level for its ongoing quarter.
Nvidia’s gross margins appear to be the second highest in the semiconductor industry, behind only those of Arm Holdings PLC ARM which licenses chip designs but doesn’t sell its own chips directly. Arm’s gross margins were roughly 93% in the December quarter.
Nvidia’s margins stand out among those elsewhere in the chip sector. Intel Corp. INTC, reported a gross profit margin of 46% while Advanced Micro Devices Inc. AMD, reported a 40% margin in the fourth quarter
Nvidia did note that its margins for the latest quarter and the current one could represent a peak due to favorable component costs in the supply chain in the past few months. But Nvidia had “visibility” into a mid-70% gross margin for the balance of this fiscal year, which would take margins back to where they were before this latest high-water mark.
In other words, even if Nvidia’s margins come down a bit from here, they’re still poised to sit above those from virtually every peer in the sector.
Submitted February 22, 2024 at 12:35AM by dukerustfield https://ift.tt/9fMQnUB
