The last time we published publicly on Nvidia last May we predicted "Nvidia is ready to be the stock market's AI darling."
Read what we wrote then.
I think that's what's happened, yes?
That was when the stock was $283 and we had a 'measly' target of 'only' $350 at the time. Since then to subscribers our price targets have maintained way above the market price of NVDA based on modeling out this big boom in revenues and earnings.
I don't try to have high targets. I simply model the trajectory of recent growth rates of a company's key businesses and income statement over the next few quarters based on the trends seen in the last few quarters. I listen to what companies say on earnings calls and at conferences like today and as long as there's nothing making me believe a different trend, I don't mind keeping those trends in place.
We went to a Buy rating about a year ago when these growth rates started going nuts.
I was bullish for subscribers despite the stock 'going sideways' at the end of last year. I was bullish ahead of earnings last quarter with my EPS numbers nicely above the Street.
This rocket ship is not a surprise to anybody that's followed me or my numbers. It reminds me of the multi-year TSLA launch that we were all here for based on my above Street numbers until we top ticked Tesla in late 2021. That was all based on simply modeling the trajectory of the income statement line items. Nothing fancy.
For now NVDA's key business, Datacenter's 2 year growth the last 4 quarters grew 97% then 232% then 309% then 419% last quarter. I can't accelerate the growth rate every quarter 100% because it's nuts, right? But I should. That means my way above Street numbers may also be too conservative.
Jensen Huang said yesterday that the industry was at a tipping point. He said the same thing in the last earnings release that led the stock to catapult 16% that next day. This is what was in that earnings release, “Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide....”
I believe his tipping point comment yesterday was a hint that demand is still surging worldwide.
The CFO today in an analyst Q&A said that customers were 'helpful' in giving their demand forecasts and that it looks like NVDA will be supply constrained later in the year.
NVDA had been saying that they are going to relieve their supply problem because they secured more capacity at TSMC and announced something with INTC.
Well it sounds like despite relieving their supply problem, it's not working. There's way too much demand and they are going to continue to be in a supply constrained position.
Too much demand maybe should have me model continued 100% jumps each quarter in that Datacenter two year trend but I'll keep my model as is.
Even by being 'too conservative' my year is way above the Street.
If I'm right, and I think NVDA deserves it, NVDA will be the highest market cap stock by year end.
All sounds bullish to me.
I'm open for discussion but the accelerating growth trends are hard to ignore.
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