The market is also saying that Tesla is worth more than BMW, VW, Audi, Mercedes, Toyota, Hyundai, Fiat, Ford, and dozens of others combined. Mehh, I don't know.
Exactly, the market isn't always rational. There's a lot of work on quantization in neural nets, for example, that can allow them to work sufficiently well on less capable hardware. It could be that some breakthrough there would obviate the need for NVDA hardware (or at least reduce how many are needed).
It is rational if you interpret market capitalization and share price movements as “the market is saying Tesla WILL be worth more than x,y z combined between time now and time whenever you want to sell it.”
For different people, the timespan between now and when they may want or need to sell it is different, and thus different people will arrive at different conclusions.
And note that “worth more” above simply means growth in market capitalization, so as long as someone is willing to buy the shares at a price supporting that increased market cap, then it does not matter if Tesla is still selling fewer cars than the others combined.
And as somebody with a significant short position, I would add - "The market can stay irrational longer than you can stay solvent" !
Their numbers for this and next Q are absolutely amazing. It's also quite "refreshing" - a company with great product, almost without competition (so far - it will come real quick). And fun part being their main advantage is probably CUDA and not even the chips itself (which by the way they don't manufacture - they "only" do the design).
But still - even with those numbers, and even with this pace of growth (both being absolutely not sustainable, and will probably reverse hard next year) - the valuation doesn't make any sense, especially given the current interest rates.
Yeah, there is no world where Nvidia grows into this valuation. It would have to be bigger than the entire semiconductor business today by itself. If you think AI can bring that much growth, well then it could happen, but it seems extremely unlikely to me.
