Yesterday I wrote up all my thoughts on whether NVDA stock is finally a decent short (or at least not a good thing to own at this point). I’m a huge bull when it comes to the power and potential of AI, but there are just too many forces arrayed against them to sustain supernormal profits.
Anyway, I hope people here find it interesting to read, and I welcome any debate or discussion about my arguments.
Wanted to add a preface: Thank you for your time on this article, I appreciate your perspective and experience, hoping you can help refine and reign in my bull case.
Where do you expect NVDA's forward and current eps to land? What revenue drop off are you expecting in late 2025/2026. Part of my bull case for NVDA, continuing, is it's very reasonable multiple on insane revenue. An leveling off can be expected, but I still feel bullish on it hitting $200+ (5 Trillion market cap? on ~195B revenue for Fiscal year 2026 (calendar 2025) at 33 EPS) based on this years revenue according to their guidance and the guidance of the hyperscalers spending. Finding a sell point is a whole different matter to being actively short. I can see the case to take some profits, hard for me to go short, especially in an inflationary environment (tariffs, electric energy, bullying for lower US interest rates).
The scale of production of Grace Hopper and Blackwell amaze me, 800k units of Blackwell coming out this quarter, is there even production room for AMD to get their chips made? (Looking at the new chip factories in Arizona)
R1 might be nice for reducing llm inferencing costs, unsure about the local llama one's accuracy (couldnt get it to correctly spit out the NFL teams and their associated conferences, kept mixing NFL with Euro Football) but I still want to train YOLO vision models on faster chips like A100's vs T4 (4-5x multiples in speed for me).
Lastly, if the Robot/Autonomous vehicle ML wave hits within the next year, (First drones and cars -> factories -> humanoids) I think this compute demand can sustain NVDA compute demand.
The real mystery is how we power all this within 2 years...
* This is not financial advice and some of my numbers might be a little off, still refining my model and verifying sources and numbers
Anyway, I hope people here find it interesting to read, and I welcome any debate or discussion about my arguments.