NVIDIA Q2 was released on August 27 with the largest event in this profit season, and the artificial intelligence giant recorded another huge performance. For the three months ending July 28, Nafidia Analysts have already proven by analysts sales expectations, revenues and instructions, although the shortage of data center sales has proven slight disappointment that sent shares of about 1 % in medium trading on August 28. Only two of the Passover, they are supposed to be Microsoft and Definition platforms.
If you are an investor in NVIDIA, or consider buying his shares now, it is important to realize that the threat of getting anything similar to the big returns is not a strong dependence on a few adult customers, or Chinese competitors play catching a knee, but the law of large numbers. Simply put, the NVIDIA profits and market pulls are already so giant that to reward shareholders, you will need to swell to dwarf size where any technology giant stands today, and adds profits at a rate, measured by billions of dollars, which has not achieved any other institution at all.
The numbers that NVIDIA should make to make you arduous money
Suppose the minimum return you want from NVIDIA shares is 10 % annually. Keep in mind that you will bet on a player who will not be given the fruits unless it is very fast from the already high P/E roof, so you are very risky that will happen – and therefore, it seems that 10 % looks like an unreculated victory. Currently, NVIDIA is proud of the largest rating far from any American company, with $ 4.44 trillion, overcoming Microsoft in second place with 19 %. During the past four quarters, he got $ 86.6 billion, putting P/E at 51. This does not seem terriblely costly – first. But again, the big challenge is that the law of large numbers, and the virtual impossibility that when it is already large, will become significantly greater, especially when you need to add all these new profits at a very fast rate.
Thus, to provide the annual return by 10 %, NVIDIA will need to double the market ceiling by September 2032 to 8.88 trillion dollars. (NVIDIA has just announced the return of the shares worth $ 60 billion and will continue to reformulate the shares, but the numbers should not be large for their evaluation; to simplify, I use a model where the number of shares is fixed.) The net profit ghost receives $ 293 billion (the maximum market is 8.88 trillion dollars divided into P/E of 30).
If the average inflation is 2.5 % over the next seven years, then $ 293 billion is $ 246 billion in dollars today. This increases 112 % from 116 billion dollars alphabetThe top of the first profit in the S&P 500, which has been published over the past four, and about 150 % above what Microsoft recorded in its fiscal year 2025 ended in June. The bell ring imposes an average annually addition For earnings of $ 26 billion. In the past three financial years, Microsoft and Alphabet have shown an expansion of profit, but not on this range; Both raised the final result by between $ 13 billion and 14 billion dollars annually, half of what NVIDIA will need to obtain this minimum by 10 %.
Problem: NVIDIA shares can only be given if there are a number of heroic expectations that CEO Jensen Huang already. Huang expects to spend on the infrastructure of Amnesty International by super balloons from about $ 600 billion per year today to “$ 3 to 4 trillion dollars … by the end of the contract.” In the end, this growth rate is about 40 % per year. This prediction assumes that the capital expression budgets for the likes of Microsoft and Meta will completely explode, which means that, also, it will reach a new escape speed in expanding revenues. NVIDIA margins will also need to remain very high for the profitable playing book for investors to become a reality.
The warning mark is that semester growth on an annual basis of NVIDIA, although it is still huge, is already decreased. Some gravitational laws always apply when it comes to a work strategy, including that if the company is profitable enough, the competition will increase. Amnesty International’s infrastructure is so profitable that competitors will immerse the market, share them from NVIDIA and wear its margins. You will need to diversify its customer base significantly from the high focus on two giant customers to keep the race in the foreground, and competitors will compete for the same big customers.
Companies, even great companies, do not keep pairing positions for a long time. This is not the way the markets operate. The best bet is that NVIDIA is still a wonderful, fast and very profitable organization. This is a very impressive achievement. But it is almost not enough to overcome the law of large numbers.
https://fortune.com/img-assets/wp-content/uploads/2025/08/GettyImages-2225847972_0ae837.jpg?resize=1200,600
Source link