NVIDIA faces multiple compression and customer competition
NVIDIA's stock is experiencing multiple compression because it has grown too large to trade at a premium, compounded by its largest customers developing their own specialized chips.
The argument
The host argued that despite consecutive stellar earnings reports, the stock has gone sideways since August 2024. He noted that major cloud customers are developing application-specific integrated circuits (ASICs) and TPUs to handle inference tasks more cheaply.
The thesis, stress-tested
✓ What validates it
- ✓A continued decline in NVIDIA's forward P/E multiple despite revenue beats
- ✓Hyperscalers publicly announcing increased capital allocation toward their in-house silicon (e.g., Amazon, Google)
▸ Risks discussed
- ▸Blackwell chip demand exceeding even the most bullish expectations
- ▸Competitors failing to deliver viable ASIC or TPU alternatives, maintaining NVIDIA's near-monopoly
Hear it yourself
"Like, it's so it's not there's not one big Nvidia competitor that NVIDIA shareholders need to worry about. There's, like, 10. And a lot of those would be competitors offering new solutions, like application specific integrated circuits, are NVIDIA's biggest customers."
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