Nvidia會重演Cisco的歷史嗎？

Hello everyone, I'm Terry. Not long ago, I shared with you that Nvidia is my second and third largest market. The price has fallen very badly recently. From the highest 130, I remember it fell to 100 at the beginning. Then during this period of fluctuation, it fell to 90 last month at the lowest. I myself made some stock positions last week when it was about 105. After I made it, I sent it to my IG. I told you before, if I buy something or sell any stock position, I will post a story on IG and share it with you. In fact, there is no special purpose. I promised to be completely transparent.

Plus, I think it's better to prove it with actual action than talking so much nonsense. Ok, what's wrong with Nvidia? Someone on the Internet said that Nvidia is compared to Cisco 25 years ago. Nvidia is the bubble of AI and ready to go to the back of Cisco. And there is also a picture like this. The price trend of Nvidia's stock price is also perfectly consistent with the price trend of Cisco's stock price. If you don't know what Cisco is,

Cisco was one of the most profitable companies before the 2000 network bubble broke out in the late 1990s, when the new network just started to take off. Because Cisco's router and exchanger basically monopolized the entire market at that time. Now someone compares Cisco with NVIDIA, because the network bubble at that time is very similar to the AI bubble now. NVIDIA is also basically monopolized in the high-end GPU market, very similar to Cisco at that time. Today's video, let's see how much this bubble is.

How big is today's Nvidia? Will it be like the old Cisco? After the bubble broke down, the stock price was down. It hasn't been restored until now, 25 years later. It's actually pretty scary. Look at this picture. Think about a wrong decision. If you buy at the 2000-year peak, you just have a 25-year break. I haven't returned it yet.

Let's look at the financial statements of these two companies. We can take the previous three years of the dotcom package and compare it with today's NVIDIA. That is, the financial statements of 2020, 2023 and 2022. Cisco's financial statements in 1998, 1999 and 2000 are very old. It has been around for 25 years.

I have already organized and summarized these numbers in this table It's easier to watch I will put the source and link of these financial reports in the information bar at the bottom of the video If you are interested, you can go and see it yourself First, let's take a look at Cisco's PS Ratio

What is the PS Ratio? The PS Ratio is the company's market cap to pay for the total sales revenue. The PS Ratio is mainly to look at the company's top line, its sales capacity, and the scale of revenue. What you need to pay attention to here is that the PS Ratio is not really related to its profitability. It's another matter of whether it makes money or not. A company can have a very high income, but the revenue is also very high. That means that the company's profitability may not be very good.

Cisco's PS Ratio in 1998 was 11.4 In 1999, it was 16.4 Before the bubble burst, it was 25.3 Let's look at NVIDIA In 2022, it was 20.7 In 2023, it was 17.9 In early 2024, it was 24.9-25

Now we can look at the TPM, which is the past 12 months to the end of July this year. The PS Ratio is 29.9, which is almost 30. So if we look at the PS Ratio according to the market sales ratio, Nvidia is not better than Cisco back then. Instead, its market value has been seriously elevated. But like I just said, the PS Ratio looks more flat. It does not mean that the company's real profitability is strictly speaking, it can only be sales.

Let's take a look at the gross margin The profit margin can be seen as the company's basic earning ability The profit margin is the profit margin of the total sales amount minus the sales cost What is the percentage of the sales amount? This is called the profit margin From 1998 to 2000, the profit margin of Cisco was about 65% to 66% It's actually pretty stable, not bad But Nvidia is even better Nvidia's profit margin from 64.8% in 2022 to 72.6% in 2024

Today, the TTM is about 76.3% It means that NVIDIA's printing capacity is really strong Basically, you can compare the net profit with a software company Generally speaking, the net profit of a software company is already very good Like Google's net profit is only 58% Apple is lower, only 46% or so So NVIDIA's earning ability is really terrible

But the net profit of Cisco back then was not bad. 65% is very high. Those tourers and plastic boxes don't need much cost. So let's continue to look down. In 1998, Cisco's net profit margin was only 15%. In 1996, it was 16%. In 2000, it was 14%. That means that although its net profit is very high, 65% of the materials sold and manufacturing costs are very low.

The products are very profitable, but the net profit they get is very little, only 15%. Why is the net profit rate so low? We can find out from the financial reports back then. They spent a lot of money on R&D. Sales and marketing are also the main operating expenses. The cost of living is so high, of course, the net profit is not much.

Let's take a look at Nvidia I don't know if it's because Jason Huang is more stingy Nvidia's net profit rate was 36% in 2002

Although it dropped to 16% in 2023 But in 2024, it was like an explosion, directly to 49% Now it's about 55% That means now Nvidia has half of the sales Finally, it will become a net profit to take home 55% net profit margin This is a very, very terrible earning ability It's about four times that of Cisco back then You can see here, you can probably understand Although it looks like Cisco and Nvidia at that time But their earning ability is not the same level

Top line, although similar, but bottom line Nvidia is completely beating Cisco Cisco's PE ratio was nearly 181 in 2000 I remember the highest point was about 200 when the bubble burst Nvidia's current PE is about 54 54 is not very good Because the average hardware factory's PE is about 20-25

But if you compare the previous Cisco with the current Nvidia, Cisco's previous 200P and the current 54P are much better. Let's take a look at what the professional analysts say. I read a few articles on Seeking Alpha, and I think they analyzed it well. Like this article, it mentions why it adjusted the NVIDIA rating to buy-in.

I talked about the position of Nvidia in the AI field earlier. From this picture, you can see that according to the financial reports of the second quarter of this year, four major tech giants in North America, Amazon, Google, Microsoft, and Meta, are all buying GPUs to expand their data centers.

Why is this picture so important? If today's Meta or Google suddenly says, OK, we will not buy GPUs for the time being. Maybe because of the bad economy or because the return on AI investment is too low. Let's pause and pause the purchase first. The margin of NVIDIA is starting to shrink. The reason why NVIDIA can print so many banknotes now is because their AI chips account for 80% of the entire market.

Basically, it's a monopoly. If you want a good chip, you can only buy it from Nvidia. So they have the right to lead the price now. A H100 GPU is now sold to Meta, which can sell for $20,000 to $30,000. But if the situation of public demand is eased, no one will buy it if you sell it for $20,000 to $30,000. And AMD's MI300X is similar to H100's performance, only selling for $10,000. Why should I spend $20,000 to buy your H100?

So the demand will slowly decrease, and H100 can only be lowered. After the price is lowered, the margin will begin to shrink. When the margin shrinks, your PE will rise. The stock will of course react and collapse. This is the biggest risk to Nvidia now. No one knows when the hot wave of AI will burn.

Amazon, Meta, Microsoft, will they continue to invest in AI? In fact, I think it's like two years ago during the epidemic, the technology industry was crazy about hiring those engineers. It's just that now it's not crazy about hiring engineers, it's crazy about investing in AI. But no one knows how much this investment can bring in the end.

And when will it slow down? No one knows But don't be too pessimistic Because from the current situation If the United Nations continues to follow this plan to calm down And if we can really avoid this economic downturn perfectly Maybe this AI investment wave Will continue for a while

Of course, this is just maybe no one knows what will happen Then we all know that to measure a technology company Can't just look at its current PE ratio We also refer to its forward PE How much is the expected future market share to measure whether its stock is expensive or not

The analyst's prediction is also mentioned in this article. NVIDIA's Fiscal Year in 2025, which is February 2024 to February 2025, the annual EPS forecast is about 2.81. Then the Fiscal Year in 2025 is 3.89, and 4.7 in 2027. These numbers can be found on the Skinny Alpha.

What does it mean? It means that according to the forecast of this EPS, the PE after this year is probably 36. The PE after next year is probably 27. The PE after the year is probably 22. If we calculate it according to the current stock price, then the forward PE for the next 12 months is probably 32. That is, from August this year to August next year.

If we use this forward P to calculate and then assume that the next year's 80% EPS growth Then Nvidia's PEG Ratio is 0.4 What is PEG Ratio? The Chinese word for PEG Ratio is called the "Peg Ratio" The lower the PEG Ratio, the lower the value of the stock Generally speaking, if the PEG Ratio is 1.0, it means that the stock price is reasonable Of course, the 0.4 PEG Ratio is very low for a technology company

Of course, this article assumes that it is 80% EPS growth You can also decide what number you want to use to make assumptions It means that the 0.4% PEG ratio is very worth buying According to this forward PE and the next expected growth The price of $105 is not expensive at all Of course, these conclusions are the analysis of the analyst's own opinion But the analysis of this article does mention a lot of details and key points And provide a lot of information I think this is the most valuable place

I can save a lot of time when I'm reading it myself. I need to manually check the information. And I have a lot of knowledge about this report. And I also read a lot of their articles to learn slowly. If you are interested, you can read it. I recommend it. After all, there are too many trash articles on the Internet now. I think the article level of Seeking Alpha is very high. And you can also see a lot of analysts. The reason they proposed this sale

So both sides have a lot of opinions and information. When you read more, you can naturally form your own ideas and opinions. This is also the most important thing as a long-term investor. What you need is your own conclusion. Instead of listening to others on the Internet and buying whatever you want. If you don't understand or don't like English, it's actually very simple. Just click on the right arrow and choose "translate". Chrome will directly translate it into your familiar language.

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After the 18th, the premium price will rise to 300 yuan a year. So if you don't want to miss it, you must grasp this discount. I will put the link in the information column below the video. Let's summarize today's video. I made a little bit of a mistake last week at 105. The main reason is actually very similar to the idea of ​​this article. I think in the next one or two years,

Nvidia will continue to monopolize the high-end GPU market And according to the current trend We are heading towards this decline After the decline There will be more and more companies with spare money Can be thrown on this KPAX KPAX is capital expenditure Investment in the future Can create a higher value on this basic facility Such as expansion factories, investment AI are all Because if you don't invest It is very likely that you will lose competitiveness in the future Another thing is that I think the GPU sold by Nvidia The router sold by Cisco back then It's a completely different technical threshold

Plus, let's look at the numbers. Nvidia's stock is indeed expensive at the moment. But if we look at it in the future, it's not expensive now. And the degree of this expensiveness is too much to compare with the Cisco of the past. Because Nvidia's profit is too strong. But I will pay attention to its margin. Can you keep the profit rate at this high point?

If you follow Nvidia news You should know that their Blackwell production delay plus some problems May cause these big companies Decide to wait for Blackwell to come out Then start buying GPU This will also cause the price of the H100 to drop And finally affect Nvidia's bottom line I think this is the biggest risk for now

That's why after this news came out Nvidia's stock fell a lot Although the financial situation is very good So if you want to overpay or compensate Better have some mental preparation Of course, these are not investment suggestions Oh, right, before the interest rate drops Moomoo has the last wave of 8.1% deposit interest benefits in the United States After that, there really is no more And they will now send 15 stocks If you put $20,000 in it You can get $400 interest after three months And these 15 stocks

I thought I would get some trash at first But after I finished it, I found that it was more than 100 yuan I think this time the discount is really good Don't take it for nothing This discount interest should be gone after the fall Then I will also put this discount link Put it in the information column at the bottom of the video But what's more unfortunate is that this discount is currently only available to friends with SSN in the United States Open to get

Alright, that's it for today's video If you think it's helpful to you Remember to give me a thumbs up Thumbs up is the biggest support to my channel You are also welcome to follow my IG I will post there the most timely I buy or sell the line See you next time