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That is extraordinarily simplistic. If NVDA is slowing and AMD has gains to realize compared to NVDA, then the 10x difference in market cap would imply that AMD is the better buy. Which is why I am long in AMD. You can't just look at the current P/E delta. You have to look at expectations of one vs the other. AMD gaining 2x over NVDA means they are approximately equivalently valued. If there are unrealized AI related gains all bets are off. AMD closing 50% of the gap in market cap value between NVDA and AMD means AMD is ~2.5x undervalued.

Disclaimer: long AMD, and not precise on percentages. Just illustrating a point.



The point is, it should not be taken for granted that NVDA is overvalued. Their P/E is low enough that if you’re going to state that they are overvalued you have to make the case. The article while well written, fails to make the case because it has a flaw: it assumes that addressing just one of Nvidia’s advantages is enough to make it crash and that’s just not true.


If investing were as simple as looking at the P/E, all P/Es would already be at 15-20, wouldn't they?


Not saying it is as simple as looking at P/E


My point is that you have to make the case for anything being over/undervalued. The null hypothesis is that the market has correctly valued it, after all.


In the long run, probably yes, but a particular stock is less likely to be accurately value in the short run.


If medium to long term you believe the space will eventually get commoditized I the bear case is obvious. And based on history there's a pretty high likelihood for that to happen.


glad you are not my financial adviser :)




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