This is, admittedly, a first world problem. Nvidia, the world's most valuable company, announced this week that its projected revenues will top $1trillion. That sounds like a pretty strong performance - but investors did not respond with much enthusiasm.
The reasons, actually, are relatively prosaic and have to do with the law of large numbers. First, its market cap is now so huge that tech investors, who are accustomed to doubling their money, can't see how that happens (assuming the company sells only to humans on this planet). And, the concerns which have arisen since the start of the year - that big customers are becoming tapped out by spending too much of their cash flow buying Nvidia's products - just won't go away. Which is not to say anyone doubts Nvidia's continued dominance; just that they wonder where the next growth spurt can possibly come from. JL
Dan Gallagher reports in the Wall Street Journal:
Nvidia's stock barely budged since its trillion dollar forecast. With shares slipping more than 2% since the start of the year, Nvidia’s stock has flatlined even as its projected business keep surging. The world’s most valuable company now commands a multiple of projected earnings below the S&P 500 for the first time in more than a decade. Investors have been growing more concerned with the sustainability of AI spending as most of the megacap tech giants drain their free cash flow to buy Nvidia’s chips. The $1 trillion forecast “did not fully answer whether Nvidia has another real upside leg beyond the already massive AI infrastructure cycle that investors have been underwriting for two years.” (And) Nvidia’s enormous market cap of $4.4 trillion also creates a challenge for investors looking for more upside potential. “Many investors want stocks that can double.”