7 ms·
Wouldn't 2x-ing their profit over the next year get the PE down to half? Why do they need to 2x their profit for a long time to come?
by what_ever 3y ago
Wouldn't 2x-ing their profit over the next year get the PE down to half? Why do they need to 2x their profit for a long time to come?
- FredPret 3y agoHalf is still crazy; 1/4 is what I would consider a little high (I'm a value investor). Especially for a tech company, I don't understand the rationale behind high valuations. A high valuation makes sense to me if the asset will deliver a reliable cashflow over time, or if there's a high chance it'll start making much more cash in years to come. More reliable / more growth = higher premium. But tech companies come and go. Admittedly, Nvidia is more of an infrastructure company, but nobody can guarantee that they will be relevant 20 years from now, so even a PE of 20 seems risky to me.