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Understanding And Valuing Nvidia – Show Me The Money

Microsoft – The Universal Tutor
May 6, 2024
Playing This Market With Thematic Ideas
Playing This Market With Thematic Ideas
June 25, 2024
Microsoft – The Universal Tutor
May 6, 2024
Playing This Market With Thematic Ideas
Playing This Market With Thematic Ideas
June 25, 2024
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Understanding And Valuing Nvidia – Show Me The Money

Nvidia - Understanding the value.

Extraordinary Profits From Ordinary Shares, Winning Stock Market Strategies

Some readers may have seen the hit movie Jerry Maguire starring Tom Cruise as a sports agent who is fired by his firm for sending an email accusing the firm of unethical business practices.

After he leaves, he decides to start his own firm and manages to persuade only one client – an aspiring football star by the name of Rod Tidwell to follow him.

What ensues is a difficult client relationship fraught with many arguments. His client wants a ten-million-dollar contract to secure his family’s future and Jerry battles to achieve this.

In the classic scene Rod demands his contract shouting “show me the money!”.

Jerry Maguire gained a cult following and has enriched our world with several catch phrases but the most famous remains: “show me the money!”.

This is also foundational for valuing investments. Cash flow is where valuation models begin and end.

So where does Nvidia’s cash come from? Well, let’s look at Nvidia’s biggest clients.

Google’s first quarters AI (Artificial Intelligence) spending was pegged at $12 billion (double from last year) Google DeepMind CEO Demis Hassabis said Google will spend over $100 billion overtime to develop AI technology.

Microsoft and Open AI have plans to build a U.S. – based data centre called “Stargate”. This data centre would house a supercomputer made up of millions of AI chips, and could also cost up to $100 billion.

Amazon plans to spend $150 billion in the coming 15 years on data centres. This will give the cloud-computing giant the ammunition to handle an expected explosion in demand for artificial intelligence applications and other digital services.

As Nvidia has 80 percent of the market this could place the company in pole position for years to come.

Tom Cruise manages to pull off a happy ending in Jerry Maguire with his single client and I think shareholders who remain loyal to Nvidia will also be richly rewarded.


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