Replies to post #111423 on Savvy Trades and Investments

[valuemind]

CSCO was $77.31 on March 1, 2000. Three years later on March 1, 2003, is was $12.98, a decline of 83%. If one day SMCI become a bubble at $8420, a 83% decline would take it to $1431. On April 1, 1990, CSCO was $0.08. from $0.08 to $77.31, it was an increase of 96,637%. On April 1, 2007, SMCI was $10.41, 96,637% increase would take it to $10060.

[wadegarret]

Value- SMCI & NVDA

I just looked at Yahoo Finance analysis tab, which has 11 analysts chiming in. It appears the eps growth in fiscal 2025 is expected to be 35% over 2024, while revenues to come in with 36% growth. The PE based on next years estimates is 38 times. For NVDA it is expected to have 22% growth in eps, and 22% growth in revenues. The PE based on next years eps estimates for NVDA is 29 times. So the PEG ratio on SMCI is about 1.1, and NVDA is about 1.3.

Value I find PEG ratio's very important, but also very important is the growth trend going forward, and the sector they're in. For example, every blue chip medical device stock ie Medtronic & Stryker are selling for a little over a 2 PEG ratio( 26 PE going forward, with 12% eps growth expected). As far as growth going forward, the PEG ratio generally gets higher as growth slows. This is quite evident with NVDA, which just earlier in the year, had a PEG ratio of .5, and now 1.3, as growth going forward has slowed.

In addition to all that I mentioned, even within broad sector ie tech, are sub sectors ie software, hardware, etc. Turns out that the software stocks always have higher PEs and higher PEG ratios than hardware stocks. SMCI and NVDA are hardware stocks, and it is precisely right now that one has to be careful, as growth is slowing, at least for NVDA. SMCI is a tougher one to value than NVDA for me, but still I would be very careful about giving SMCI more than a 1 PEG ratio, as there will inevitably be competition that will slow growth.

IMO right now, I would give NVDA a price target of $650-$700, and SMCI $1000-$1050.

[SSKILLZ1]

SMCI

And the moral of the story, Is CSCO is not even where it was in 2000, now. despite earnings so much more today than then. So yes could a blow off top continue to occur. The answer is yes. But lets face the facts of that csco call, it is 24 year later and we are below the peaks of that time despite the company being more profitable today. You might see the story as this thing is running and I make a ton of money now, and that could actually be true, heck it allready has happened a ton to SMCI Shareholders. I see it when mania sets in like this, the inevitable payback will occur, when the music ends nobody knows. I think SMCI is allready overvalued, competition with this is gonna come in it always does (As always the market is pricing in growth staying at this ridiculous rate and it never does for any stock over the long run), and when that happens guess what happens to margins. furthermore the insatiable demand for these products will eventually drop/peak/ or at least will slow down tremendously, so buying/keeping something on a huge parabolic run because your questioning whether it is gonna go on a CSCO type run during the bubble mania of all time is the wrong question? I would never hold a stock trading at this absurd run and valuation.

And in my opinion calling SMCI undervalued comparing it to well it is not as frothy as CSCO was in it's Bubble mania is wrong way of thinking. The odds of it getting there is unlikely. Even if it does that is not investing that is gambiling, hoping for this to match the biggest bubble of all time. SMCI is not undervalued, it is waaaaaaaaaaaaay overvalued. Now clearly that doesn't mean in the short run it can't work higher even after the parabolic move it has had. But the day of reckoning is coming for the AI Bubble what inning where in, remains to be seen, but this isn't gonna end well in my opinion. All is just my opinion, and I could always be wrong though.