I don’t fancy myself any sort of “expert” on tech, nor on anything else for that matter.
It’s better to know a little about a lot than a lot about a little. Or at least that’s my experience in life. I’m an ersatz renaissance man. An imitation polymath.
As a tech layperson, I’m not in a position to weigh in authoritatively on whether and to what extent the market’s derelict in according to Nvidia the respect it deserves for Wednesday evening’s beat and raise.
But I would note that this is a company trading on a 24x forward multiple at a time when the rest of the Mag7 is trading around 30x, the cap-weighted S&P 22x and the equal-weighted benchmark nearly 18x — and it’s growing revenue at a near triple-digit rate.
The simple figure above’s a not-so-subtle reminder: Nvidia’s quarterly revenue during the April quarter five years ago was $5.66 billion. Sales were $81.62 billion last quarter.
I don’t want to say “I’ve never seen anything like that before,” because I probably have and just don’t remember. But Nvidia’s capacity to scale the data center business is an ongoing source of astonishment to this observer.
As Bloomberg noted in an article that carried several headlines before the editors finally settled on “Nvidia Tells Skeptical Investors AI Is Ready to Go Mainstream,” (Bloomberg changes their article titles in real-time to fit the price action — URLs don’t lie), overall sales this year will be around 22 times higher than they were just half a decade ago.
Moreover, Nvidia now says it’ll be the world’s largest supplier of CPUs. “We have visibility to nearly $20 billion in total CPU revenue this year,” CFO Colette Kress said on the call, adding that CPUs are a $200 billion market that Nvidia “has never addressed before.”
There was some debate about what, exactly, Nvidia’s counting (or, more to the point, perhaps double-counting) in that $20 billion “standalone CPU” projection, but regardless, Kress’s point was that Nvidia hasn’t ceded that market, which is suddenly sexy again, to “lesser” companies. The opposite, in fact.
Nvidia’s obviously not a stranger to CPUs, but from what I understand, theirs typically come in a package deal with the GPUs which transformed the company into the most valuable enterprise in the history of capitalism. Now, Jensen Huang’s going to sell CPU-only servers in a bid to ensure Nvidia dominates, or at least competes for, business at every node of AI service delivery.
It may very well be the case that most, all or even too much, good news is priced into semis broadly after the recent run-up. Indeed, a simple regression suggests returns have outstripped the fundamentals.
The figure above, from Goldman, shows the extent to which the semi rally’s outrun the big revision to forward profit forecasts since late-February.
Goldman attributed that in part to the impact of leveraged ETFs, where a huge portion of AUM is semi or semi-related. “From a flow perspective, recent dynamics, including inflows to leveraged ETFs, may help explain the recent outperformance of semis to recent earnings revisions,” the bank said.
In any case, Nvidia’s up a mere 18% in 2026, trailing the YTD performance for the SOX by more than 40ppt. That, as company analysts expect Nvidia’s sales to comprise a third or more of total semiconductor sector revenue this year.
