Nvidia and Broadcom valuations remain highly attractive
The speakers argued that dominant AI chipmakers like Nvidia and Broadcom offer highly attractive valuations relative to legacy CPU competitors like Intel.
The argument
The speakers noted that while legacy players like Intel have struggled to generate earnings, their stocks have run up on a price-to-sales basis. In contrast, dominant players Nvidia (at ~15x 2027 EPS) and Broadcom (at ~12x 2028 EPS) trade at remarkably low forward multiples given their oligopolistic market positions.
The thesis, stress-tested
✓ What validates it
- ✓Nvidia and Broadcom meeting or exceeding forward earnings estimates
- ✓Intel failing to show structural margin recovery in upcoming quarterly reports
▸ Risks discussed
- ▸Broad multiple contraction across the entire semiconductor sector
- ▸Unexpected market share losses to legacy or custom hyperscaler silicon
Hear it yourself
"Most of the chips that are being bought are being capitalized so they don't, you know, they don't go out of the operating expenses. They go out of they're capitalized, and then they are depreciated away over many years, whether it's four years, it's seven years, whatever. So are you saying, Jim, that the earnings are inflated, you you I mean, I think you did say that, by the fact that the depreciation hasn't hit yet? Just when is the depreciation going to hit, and how is that going to impact profits? I know Val has a lot of thoughts on this too. So there's two problems. One is that an awful lot of"
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