[lateforwork]

Counter argument: https://www.nytimes.com/2025/12/09/business/wall-street-valu...

Excerpts:

In the 1990s and early 2000s, many of the companies leading the stock rally were not making much money, if any. This led to very high P/E ratios for some companies because share prices kept going higher, even when earnings were lagging well behind.

While Nvidia’s stock price has risen roughly 1,000 percent over the past three years, from $17 to $180, its earnings — the actual money it is making — have increased even faster. This means the stock is arguably cheaper today than it was three years ago, said Stacy Rasgon, a stock analyst at AB Bernstein.

[mitthrowaway2]

But the circular financing throws those earnings into doubt. There's no question that Nvidia makes fantastic products, but right now a lot of its customers are buying those products using borrowed money, or money invested in them by Nvidia itself. Its highly questionable whether those earnings are sustainable.

[lokar]

In the case of nvidia, the price is based on expectations of future revenue, not current. And the future numbers are clouded by a web of opaque circular deals with customers.

[pipo234]

That is how it seems, yes.

But Nvidia also has some less than transparent arrangements to support their customers in buying their goodies.

Which is not to say they aren't making money, it's more that in hindsight we may discover that the p/e ratios were not the primary measure we should have paid attention to...

[scottlamb]

Nvidia is selling shovels, widely believed to be a better business than panning for gold. So...

* You can't generalize from Nvidia to companies spending all the money on hardware, electricity, and labor without making a profit.

* It's also worth asking if Nvidia will keep having those earnings if all the AI companies crash. Unsure about this. At least there's a bunch of pent-up demand from people wanting GPUs for other reasons.

* Also, there's the $100B they invested in OpenAI...