Cisco seems the most reasonable analogy to me. They were the ones selling shovels during the Internet boom. The Internet market is many orders of magnitude larger today than it was during CSCO's peak. CSCO is still highly profitable but it's stock price is still well off its peak.
Cisco at its peak in 1999 had a P/E ratio of near 200. Nvidia trailing 12 months is closer to 50. ( Today it is closer to 60 ). So I dont think Cisco is a good comparison.
Cisco had a 550bn market cap at the height of the bubble. That's a lot but NVDA is about to overtake Saudi Aramco in market cap.
How much revenue can nvidia realistically have 5 years from now, and at what margins? 100bn in revenue (NVIDIA grossed 25bn last year, so 4x top line growth) at 35% gross margins = 35bn. Slap a 25x multiple on that and you have a 900bn market cap. Discounted at 8% to today that's .65 * 900bn is 600bn. Not 2000bn. Are my numbers too pessimistic? Probably.
But still, it's hard to come up with 2029 numbers that justify a 2000bn market cap today. Even with a 5% discount rate NVDA has to be worth 3000bn 5 years from now, for current investors to get a 0% return.
> How much revenue can nvidia realistically have 5 years from now, and at what margins? 100bn in revenue (NVIDIA grossed 25bn last year, so 4x top line growth) at 35% gross margins = 35bn.
I think you are off by a year because NVDA’s fiscal year is 1 year ahead. NVDA’s fiscal 2024 just ended (ended Dec 2023) and was announced this week.
Their latest quarter (ended Dec 2023, fiscal Q4 2024) had 22.1bn in revenue. That’s more revenue than Cisco’s full year in 2000.
Apple's net income was 97bn last year, Amazon's net income was 10bn. I'm not sure why you would even put those in the same category. Amazon has historically been valued on their free cash flow.
For nvidia to have 100bn in net income they would need at at least 200bn in revenue. Apple has 100bn in net income on 400bn in revenue, for comparison.
Ultimately the question is whether nvidia's moat (chips + cuda) will be durable. My guess is competitors will arrive soon and that nvidia's margins will go down. Right now nvidia seems untouchable, but reality will set in sometime next year.
The problem with this kind of analysis is you have to bake in a bunch of assumptions. For example the Reddit link in the sister comment assumes that the x-axis scale stays the same and arbitrarily chooses a starting date and y-axis scaling to make the lines fit. This pre-supposed all kinds of things about where we are in this boom-bust cycle that may not be true.
That’s a P/S of 29 (but one quarter in there is forward looking)
NVDA’s year ended Dec 2023 saw $61bn revenue. All 4 of quarters in there are backwards looking. If you shave off the oldest one (7.2bn) and add on this current quarter (22bn forecasted), you get 75.8bn.
