I don’t want to pile insult atop injury for the earnest skeptics and well-meaning bubble watchers out there, but… well, the writing was on the wall with Nvidia. In large letters. They were gonna beat. It was just a matter of by how much and whether it’d be enough to drive another leg higher for the stock.

Notwithstanding my sincere appreciation for the sense of generalized incredulity that some market participants harbored vis-à-vis the rapidity and scope of the rally, you don’t want to short bubbles.

I’ve been over that before in these pages. And quite explicitly. On May 25, 2023, I published “Don’t Short A Bubble.” That article was about Nvidia. That day, the market value of the company soared by $184 billion. Here’s a lengthy, spliced-together excerpt for anyone who might be new ’round these parts:

You don’t want to short bubbles. That might sound counterintuitive. After all, if not bubbles, what to short? Here’s the problem: Nine times out of 10, you’re not going to time it correctly, and by “nine times out of 10” I actually mean “never.” You’re never going to time it correctly. Successfully shorting bubbles (real bubbles) is like hitting the lottery. Sure, somebody’s going to win, and you can’t win if you don’t play, but that somebody isn’t going to be you, which means to play is to pay an idiot tax. Over the past several weeks, those of a bearish persuasion repeatedly pointed to the narrowness of the US equity rally, noting that the entirety of this year’s gains for cap-weighted benchmarks were attributable to a handful of names, including Nvidia, which became synonymous with the burgeoning AI “mini bubble.” Implicit (and sometimes explicit) was the notion that a top-heavy rally is destined to tip over. That sounded convincing and to be sure, I echoed some version of the narrative, but it’s suddenly clear that naysayers underestimated the potential for AI to be a “right here, right now” fundamental catalyst. The associated revenue bump for Nvidia might be a “one-off” (the new, modified bear case) but it isn’t far off, as some previously suggested. Rather, the company is raking it in as we speak. And so is CEO Jensen Huang.

Again, that was written nine months ago. But parts of it could’ve been written one month ago. Or even one week ago. Or even one day ago.

At the time (so, last May) Jensen Huang was worth around $34 billion. Today, inclusive of Nvidia’s post-earnings rally which delivered to Huang a $9 billion one-day windfall on paper, he’s worth nearly twice that.

Another problem with betting against (figuratively or literally) the Nvidia “bubble” is that once earnings started to accelerate, the “bubble” characterization began to look more and more like a misnomer. Prior to the company’s Q1 report last year (i.e., the now famous “guide heard ’round the world”), the stock traded at ~65x. It came into 2024 trading at just ~25x.

Even after the YTD surge headed into Q4 results, it was still trading at “just” ~33x. Hardly cheap, but not a proper bubble.

If the entire market‘s trading at 33x, maybe that’s a bubble. To be clear, though: The most exciting stock on the board growing sales by 265% and profits by nearly 500% isn’t a bubble at 33x. It’s just not.

So, yeah, if you doubted this thing (Nvidia) headed into this week’s report, “you’ve got some ‘splainin’ to do, Lucy.”

Nvidia’s ~$275 billion market cap gain Thursday was (easily) the single-largest one-session value creation event in US stock-market history.

Do note (not that it’s lost on anyone): This comes just three weeks after Meta scored a near $200 billion one-day value gain.

Sometimes when I go back and read articles from the archive, I’m impressed with myself. How’s that for off-putting immodesty? Try as I might (and sitting here digital pen in “hand,” I did try), I can’t conjure for the life of me a better punchline than the one I used in the nine-month-old Nvidia article cited and linked above.

“If you believe any part of the AI apocalypse story, you’re probably despairing on Thursday,” I wrote, describing the frenzied run-up in Nvidia’s shares and the extent to which the rally appeared to presage a self-fulfilling prophecy whereby the AI hype cycle could engender a flood of investment, thereby facilitating even more rapid development of what some believe is a dangerous technology. “It’d be ironic,” I went on, “if humanity’s incurable penchant for asset bubbles accelerates our demise as a species. After all, human civilization is the biggest bubble history has ever known.”