Nvidia reports tomorrow. Remember, it was only fifteen months ago that Jensen Huang, Nvidia's founder/CEO, declared the "beginning of a major technology era."
Since that "Nvidia moment," the company has more than quadrupled revenue. It's data center business has grown from representing half of overall revenue, to nearly 90% of company revenue.
And the data center business has become very, very profitable. Operating margins have exploded higher, from 21% (pre "Nvidia moment") to 65% in the first quarter, which was reported last May.
So the profitability of each dollar of revenue has tripled over the period.
This growth dynamic has led to a quadrupling of the stock since the "Nvidia moment." And that has made Nvidia one of the most valuable companies in the world, worth more than $3 trillion.
But as we've discussed along the way, this growth dynamic has also meant the valuation on Nvidia shares have gotten cheaper along the way.
So, what's expected tomorrow for Q2?
From the May report, they guided revenue of $28 billion, which would be a fifth consecutive quarter of triple-digit year-over-year revenue growth.
That said, quarterly growth in Nvidia has been hot, but as you can see, it has been on the decline. Based on guidance the quarterly revenue growth in data center will fall to about 10% (qoq).
Let's assume they beat guidance and do the average quarterly revenue growth of the past two quarters (which would be around 20% growth).
Here's what the valuation picture looks like.
It's no longer getting cheaper.