Nvidia closed on 5 November at 23 times earnings, below Procter & Gamble’s 25 and Costco’s 51. Its multiple fell from 58 in a year as earnings more than doubled. The market is pricing in peak profits. Results on 17 November will test that.
This is the clearest way I have seen the Nvidia puzzle put. The 23 times number looks cheap until you remember what a low multiple means for a cyclical, and the 55 percent fall in earnings per share in the year to January 2023 is the warning. I keep coming back to the same split you draw. The quarter on 17 November will probably be strong, because the demand is still there in the numbers you cite. The guide is the real test, and after that it is the 2027 budgets in late January. I am not buying the cheap multiple on its own. I want to see a customer commit to next year's spend first, and I will be watching gross margin for the first sign that pricing is slipping.
That's a sensible order of evidence. The catch is that proof has a price. If January's budgets hold, a stock at 23 times trailing earnings, and about 18.5 times its latest quarter annualized, could re-rate before the confirmation arrives. That's why the post talks about sizing rather than timing: treat it like a cyclical, so being early or late doesn't decide the outcome.
This is the clearest way I have seen the Nvidia puzzle put. The 23 times number looks cheap until you remember what a low multiple means for a cyclical, and the 55 percent fall in earnings per share in the year to January 2023 is the warning. I keep coming back to the same split you draw. The quarter on 17 November will probably be strong, because the demand is still there in the numbers you cite. The guide is the real test, and after that it is the 2027 budgets in late January. I am not buying the cheap multiple on its own. I want to see a customer commit to next year's spend first, and I will be watching gross margin for the first sign that pricing is slipping.
That's a sensible order of evidence. The catch is that proof has a price. If January's budgets hold, a stock at 23 times trailing earnings, and about 18.5 times its latest quarter annualized, could re-rate before the confirmation arrives. That's why the post talks about sizing rather than timing: treat it like a cyclical, so being early or late doesn't decide the outcome.