Master of the universe

NVIDIA delivered solid results and an upbeat outlook yesterday after the close, reassuring investors and lifting the share price by about 5% in late trading. Third-quarter numbers were again impressive: revenue rose 62% to USD 57 billion, ahead of expectations. The company now guides for roughly USD 65 billion in sales for the January quarter.

Management also reiterated that the expected half-trillion-dollar AI revenue opportunity may exceed earlier assumptions. As CEO Jensen Huang put it, “There’s been a lot of talk about an AI bubble. From our vantage point, we see something very different.” According to Bloomberg, the stock now trades at 28.3x forward earnings, with consensus expecting earnings to grow by 48% ANNUALLY over the next five years. NVIDIA is today worth more than the 20 largest European companies combined !

At ECP, we fully acknowledge NVIDIA’s extraordinary success as a core winner of the AI revolution. At the same time, we remain humble observers of a market where one company increasingly pulls away from the rest. This widening gap also creates opportunities in more traditional businesses with undervalued earning power.