According to MarketWatch reports, on November 2, NVIDIA’s stock price closed up 2.22% to $264.01, continuing to write a record closing high; over the same period, Berkshire Hathaway closed up 0.59% to $287.93. Based on the closing price on the 2nd, NVIDIA’s market value surged to US$660 billion, surpassing Berkshire Hathaway (US$652.4 billion) for the first time, becoming the seventh largest company in the United States by market value.

Since the beginning of this year, NVIDIA’s stock price has rebounded strongly, with a cumulative surge of 102.23% as of November 2, while Berkshire Hathaway’s increase of 24.18% over the same period.

Since hitting a pandemic low on March 16, 2020, NVIDIA’s market value has surged by nearly $530 billion, according to Dow Jones Market Data, an increase that is even higher than that of Visa, JPMorgan and Walmart. Current market capitalization.

Milestone 1: surpassing Intel to become the largest chip maker in the United States by market value

On July 9, 2020, Nvidia surpassed Intel Corporation to become the largest US chipmaker by market value for the first time. According to FactSet data at the time, Nvidia closed up 3.5% to $408.64, with a market value of $251.31 billion; Intel closed up 0.5% to $58.61, with a market value of $248.16 billion.

According to data at the time, from the beginning of 2020 to the statistics day, Nvidia’s stock price rose 74%, Intel fell 2%, compared with the PHLX semiconductor index rose 11%, and the technology-heavy Nasdaq composite index rose. 17%, and the S&P 500 fell 1.9%. While this isn’t the first time a U.S. chipmaker has surpassed Intel’s market cap, it’s a first for Nvidia.

In 1999 and 2000, Texas Instruments Inc. (TXN) overtook Intel several times, and from late 2012 to mid-2014, Qualcomm Inc. (QCOM) and Intel Corp. Often vying for the top spot in market capitalization.

Milestone 2: surpassing TSMC to become the world’s most expensive semiconductor company

Nvidia appears to have overtaken TSMC as the world’s most expensive semiconductor company, according to the latest statistics.

Data from Google Finance shows that Nvidia’s market value has reached $559.63 billion as measured by market value at 4:00 pm EST on August 31, 2021, surpassing TSMC’s $558.5 billion. Investors have piled into Nvidia’s stock, sending its shares to unfathomable heights as Nvidia continues to post strong growth amid an unprecedented chip supply crunch in the semiconductor industry.

Honestly, I love Nvidia. As a company, its products are far ahead of its competitors, its leadership team is as good as theirs, its brand loyalty is top-notch, its total addressable market is huge, and its growth story is far from over.

However, I don’t like Nvidia stock because of unrealistic assumptions in its valuation. As a financial analyst and researcher, I feel compelled to uphold my responsibilities to retail investors, so when I meet them, I continue to point to frothy valuations.

According to Nvidia’s investor presentation, the company’s total addressable market could grow to about $250 billion by 2023, which means Nvidia has huge room for growth. The market narrative surrounding Nvidia is that it will dominate the GPU, data center, and CPU markets in the future.

However, this claim may never come true. Most of Nvidia’s products are beating the competition. However, the breadth of Nvidia’s product portfolio is limited, which means its actual TAM isn’t quite as high as $250 billion. Interestingly, Nvidia is said to be ahead of Intel when it comes to GPUs. However, Intel is still the dominant player in this space, with an overall GPU market share of around 68% (discrete + integrated GPU market).

In my opinion, Nvidia’s product portfolio is not broad enough to beat Intel’s dominance in the GPU and data center markets (at least for now). I recently discussed Intel’s new hybrid sourcing strategy and outlined why I think Intel can still regain lost market share from the likes of Nvidia and AMD (AMD). The semiconductor industry is highly competitive, so I shouldn’t see a day when Nvidia captures about 70% of the market. (Even if TAM grows to about $300 billion by 2031).

We’ve researched Nvidia extensively in 2020, and I’m excited about Nvidia’s decision to buy ARM. However, the deal seems increasingly likely to fail as regulatory concerns mount.

Coming back to Nvidia’s competitive dynamics, both AMD and Intel are poised to launch noteworthy products in a market dominated by Nvidia in the coming quarters, and Nvidia is also at risk of being overtaken by other semiconductor companies. As the three largest semiconductor companies, Intel, AMD, and Nvidia, cannibalize each other’s markets, the likelihood of a price war that hurts margins (profitability) increases.

Also, as you know, the semiconductor industry is highly cyclical. Given the ongoing supply crunch in the semiconductor industry, we have to admit that we may be near the top of the semiconductor cycle. In the end, I believe the ARM acquisition is a big deal for Nvidia’s future. However, the merger is facing regulatory scrutiny,

By 2021, Nvidia’s revenue is expected to be around $26 billion (up 54% year over year). However, Nvidia’s growth is expected to slow sharply to 12% in 2022. Now, analysts’ estimates may be wrong, and Nvidia may continue to grow rapidly. Having said that, the law of large numbers is true and TAM is finite.

Based on my projections for several of the company’s growth drivers (eg, gaming, AI, 3D design, self-driving cars, etc.), Nvidia could actually achieve a CAGR of about 15% over the next ten years. As the revenue base grows, I expect Nvidia’s growth rate to taper off over the next decade (even as it continues to maintain its technological leadership).

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