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They want to dethrone this king.
Two trends have emerged since Nvidia (NVDA) released its big quarterly results and outlook on Wednesday night.
Track One is owned and run by Wall Street, and we see Nvidia continuing its meteoric growth to new profitable highs this year and next. Consensus estimates (which you can track on Yahoo Finance) are trending upwards (again), and Wall Street continues to push for higher price targets.
The other track is owned and operated by the media, which is increasingly trying to poke holes in Nvidia's investment thesis. Ah, I get it, it's our job to be skeptical of the numbers, the prevailing narrative, and the leaders.
But touting that Nvidia's stock price is a bubble because it's soaring, or that its financial situation may be bubbly because of its phenomenal growth rates, is completely off the mark, in my opinion.
Let me start by saying that I am not entering this race, I do not own Nvidia stock and never have.
All I am saying is that asset bubbles have some simple characteristics.
1: Assets that are rising in value usually don't have the fundamentals to justify that increase in value, and 2: People are blindly buying them without understanding them, primarily because everyone else is buying them.
You won't find any of these with Nvidia.
Investors are very knowledgeable about Nvidia's business and appear to be buying for the right reasons.
And Nvidia's growth rates justify a higher valuation: The company just grew revenue by 461% in the first quarter. Sales surged 262%.
Why? Because generative AI, driven by models backed by Nvidia chips, is driving a seismic shift in the tech stack. No one can match this company's technology. Concerns about Amazon (AMZN) and Apple (AAPL) developing their own AI chips are debatable, but Nvidia is doing this at scale and is 27 miles ahead of those companies.
“People want to deploy these data centers now,” Nvidia CEO Jensen Huang told Yahoo Finance's Julie Hyman and Dan Howley in an exclusive interview shortly after the company released its earnings (video above). “They're [graphics processing units] “We want people to start working, earning money and saving now. The demand is very strong.”
Will Nvidia continue to grow its revenue and profits by triple digits? No, but the growth rate will remain very high and faster than its competitors.
A bubble? Let's face it, everyone!
Amazon AWS has begun manufacturing AI chips to better manage supply chains where these powerful technologies are in short supply. AWS CEO Adam Selipsky talks about the strategy in a new episode of the Opening Bid podcast. Listen below.
Brian Sozzi Editor-in-Chief of Yahoo Finance. Also,Starting BidPodcast. Follow Sozzi on Twitter/X Brian Sozzi and LinkedInHave a tip on a deal, merger, activist situation, etc.? Email brian.sozzi@yahoofinance.com. Are you a CEO and would like to appear on Yahoo Finance Live? Email Brian Sozzi.
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