NVIDIA’s Valuation and AI’s Negative Sum Game - with Aswath Damodaran | Prof G Markets

On this week's unfiltered video version of Prof G Markets, Scott speaks with Aswath Damodaran, professor of finance at NYU’s Stern School of Business, about his valuation for NVIDIA, tech’s rally this year, the implications of AI when every company has it, and opportunities in the markets right now. Follow Aswath on Twitter, @AswathDamodaran.
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[@gingerkilkus]

Biggest lesson i learnt in 2022 in the NVIDIA’s market is that nobody knows what is going to happen next, so practice some humility and follow a strategy with a long term edge.

[@TomD226]

Uncertainty... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.

[@lowcostfresh2266]

@@TomD226 I'm intrigued by your experience. Could you possibly recommend a trustworthy advisor you've consulted with?

[@TomD226]

Laurel Dell Sroufe is my adviser and she is highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.

[@leojack9090]

@@TomD226 Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.

[@jessicasquire]

Its quiet interesting how we reject the reality of our situation and expect to be able to observe it, control it and even change it. I used to be financially depressed until I read a book that made me realized that the secret to making a million is making better investments.

[@Erikkurilla01]

May I ask which investments are good? I've been looking at a few different ones but want others' opinions as well

[@jessicasquire]

What I think everyone need is an adviser, who can help you get in and out of any investment at any time and you'd sure be in Profit. With this I feel anyone can basically achieve financial freedom

[@jessicasquire]

*STEPHANIE KOPP MEEKS* , That's whom i work with

[@jessicasquire]

You can glance her name up on the internet and verify her yourself. she has years of financial market experience

[@Erikkurilla01]

Thanks so much I was able to find her page and I already leave her a message

[@ganeshbala]

Just wow! A high quality and insightful convo. Thank you Prof's G/D

[@robframe134]

I enjoy Aswath's insight. He's one of the few when I see him on any financial channel I take the TV off of mute.

[@tommyrosales2019]

Amazingly wise man. Much respect

[@pntiwari4937]

Thanks to the channel and Professor Aswath Damodaran.

[@benitabussell5053]

More quarters and outlooks from big tech names, powered by Nvidia (which has more chips than we thought!), as well as this trader FOMO, may lead to renewed buying strength in markets in September and October. I want to invest more than $300k, but I'm not sure on how to mitigate risk

[@DougRoberts-ir4mj]

Nvidia stock is roaring like many did during the 1990s bubble. But this time around, the hype around new chips is happening in a more mature demand environment.

[@thomas6502]

Wow, exceptional guest. Thank you.

[@ssiddarth]

Great interview, glad to have been recommended this channel.

[@rolfjacobson833]

very impressive guy. actaully all three of you are. well done

[@AsherDevang]

I have followed Aswath Damodaran for the past two decades. His insight and eloquence never ceases to amaze me.

[@Fj8282haha]

Amazing money losing if u listened his joke

[@alexi2460]

Prof AD should have shouted the risk safe story during 20-21. As I tuned into his on line lecture series for a couple of years, I found it too technical for the average person but he is brilliant.

[@teslamozo5891]

Aswath your are simply a GEM. A rare find when it comes to honest opinion. Thank you !

[@maxs351]

Nvidia at 400 overvalued. Now its sitting at 740 😅

[@AbijithB]

@@maxs351 that's a different case, It can be highly overvalued.

[@andykopitske2997]

Loved the breadth of the questions you asked. Doing so helped to demonstrate the same curiosity that Aswath must have had to begin exploring, considering, and ultimately formulating his responses. Rather than simply consuming, wouldn’t it be great if we all sought to genuinely pursue well considered responses. I’m preaching to myself here (but maybe doing so well be of benefit to others as well.

[@ApplesOranges123]

Two of my favorite people!

[@LDacic]

Big fan of anything Damodaran has to say. Thanks for sharing.

[@Fj8282haha]

Bet u missed out big $$$$$$ on his jokes

[@rodneybarington4483]

This is one of the smartest well grounded people I've seen interviewed and I've e seen many, loved his take on Larry Fink, I think its just a matter of time and the meltdown will begin and unreal opportunities will be there but most likely a year or more away. If you adjust for the Bank's loan portfolios and Bond portfolios there all broke, where can you go, please tell me.

[@chiefenumclaw7960]

Excellent guest! Thank you for sharing your thoughts with us Aswath.

[@kaushalendraraomannava4578]

Stupendous! Incredibly wise. This is wisdom at its peak?

[@ajkim1124]

Thank you for this important information

[@rezapanah9398]

Thank you for arranging this amazing informative interview ! Excellent stuff.

[@briancase6180]

I haven't heard Aswath before. I think he's really insightful and perceptive. I think he thinks the way Buffett thinks, which is a compliment in my book.

[@bullpup1337]

well he is a literal professor on this stuff

[@woowayinvs1736]

I love Aswat!! thank you!!

[@shivamgairola5958]

A great channel. One of the best videos.

[@simona4315]

Prof Damodaran (not Galloway) is a treasure 😊

[@mukd559]

Great question about SNAP, very interesting stock IMO.

[@JohnCorrUK]

Brilliant to have Prof D on the pod … amused by his dismissal of ‘experts’ and preferring markets!

[@TheFinnmacool]

Yeah that was great!

[@venkynakhate5682]

Truly impressive for Dr Damodaran to admit he is human and inconsistent, even though he made a killing in NVDA stock

[@LDacic]

It's not humble, it's common sense. He's in the common sense business as a value investor. Cocky people in finance are just baboons, nobody has a crystal ball.

[@erandeser5830]

Good that you tell that you are excited. I did not notice. 😄

[@macbeth5891]

great podcast!

[@scale_bar]

Quality check.... the chart posted in complementing Aswath's commentary about bitcoin being correlated to the stock market shows their performance during the first half of 2021...

[@AndrewClarkePhotography]

Experts have no idea and most people are sheep. Aswath, great points.

[@BigHenFor]

But Aswath Damodaran is an expert, Lol. As in life, in every profession there are good, bad, and indifferent practitioners. And even then you need to figure out what good actually means. And investors need to develop their own instincts, as it is they who are risking their own money, and not any expert. I respect Aswath and listen to his lectures even though the stock market is for me at least, is the least interesting one. Why? The Stock Market is like voting. If it changed anything fundamentally, they would ban it. It's become so detached from the real economy, it's more a morality tale in action. You know it's not going to end well. And Aswath is good because he's so grounded in the reality of the stock market and the valuation of businesses. And if I was 22 again, knowing what I know now, I'd still keep my feet on the ground.

[@kaliamunish]

Great talk by Aswath

[@shilpgandhi]

Great Insights Aswath

[@rahulchahal3824]

Simply Superb

[@future62]

Great great talk. I will have to scour the web for his blog

[@bullpup1337]

he has a channel

[@a.j.4644]

23:16 Love the talk about the Dark Dide of Disruption and how cheap capital (VC money) destroyed some businesses, like taxis, before a truly viable, profitable alternative had been created.

[@indersingh1212]

7 months later NVDA stock is at 919 dollars. Aswath clearly does not understand this space.

[@manout-kidin8735]

Watching it @ 1.5 X playback speed . This is the sweet spot for this video 🙂

[@lpgoog]

Love this guy. Very knowledgeable

[@rocking1313]

Nvidia has had 2 near death experiences ...thanks Prof. Damodaran!

[@dumberer8]

At the end where he says “Good news is going to be bad news and Bad news is going to be good news” has perfectly described the macro environment for the last 2 years. 🎯 Almost every time there’s an earnings beat on my stocks, the stock price dips and vice versa.

[@TheGeorgeous]

More traders waiting to play the obvious price movements of good/bad news ?

[@macleanandrades4579]

Great interview! Especially liked the part where Aswath takes down Larry Fink :)

[@popinjay3000]

well its over $700 now, i bought in at the $400 price point on fomo, but if i had listened to this i would not have done it, ignorance sometimes can work in your favour

[@valoriefalorie4223]

What are those companies that are currently undervalued???

[@SRQRay]

Prof Damadaran, what about the partnerships NVDA is getting into in exchange for H100’s?

[@AudiTTQuattro2003]

Damn, this guy is spot on. Sorry to say I had never heard of him until now.

[@TheFinnmacool]

No fault of your own. It's the shills they put in your face everywhere you go to drown out the voice of reason.

[@maryhadda8420]

Same here. I am impressed.

[@bullpup1337]

he has a youtube channel if you are interested. But a warning: his analysis is extremely thorough and complex, with a lots of formulas and calculations. But not too mathematical, more like common sense

[@Luckylearner]

Same.

[@Theamanhanda]

Love his opinion on Larry fink

[@dhananjayadasanayake5882]

Great video 👍🏻

[@mikebenz6467]

I have to say that this episode is a real jewel

[@jerrykaralis2679]

I like at 8:35 Scott easily dismantled Aswath's critique of buying Nvidia at an "overvalued" price. Overvalue is subjective when it comes to certain companies.

[@MarkCicero]

Selling half of your position is one of the best ways to leg out of your positions

[@georgemalovrazich7390]

Impressive takes - calling balls and strikes!

[@LittleKing150]

Yoooooooooo business dream team! What a crossover

[@safol123]

excellent

[@bukki07]

I’ve basically had Palantir, C3 ai, Nvidia on a watchlist all of these have performed above 57% in 1 year I guess it is a good time to buy in on them or have I missed? New to investing, happy to discuss.

[@PurvisTwiggs]

Good question. I have been watching other AI stocks like AMD, Broadcom and Marvell. I have a 100 grand to put into the markets now it has shown bullish strength but I am very skeptical.

[@irenatrulove]

Chief accountant sold 400k shares on 3rd August along with other 3 directors, over 40 million shares sold 3 days before earnings. Something smells bad. I say sell.

[@PurvisTwiggs]

@@marcoerrett Right, my question then is where should I allocate more of my contribution from my paycheck to in my 401k, Tbills and Bonds or stocks since the S & P has climbed 20% YTD?

[@bukki07]

@@marcoerrett how has that worked out for you so far?

[@irenatrulove]

@@marcoerrett Hi can I get a number to this Loren? Vanguard advisor takes forever to pick up, my patience wears thinner with each ring.

[@M2Capital01]

Masterclass

[@davidng2699]

Check out Prof Damodaran's expression at 28:40 when told that Larry Fink said Bitcoin is digital gold. 🤭

[@maryhadda8420]

Bitcoin IS digital gold! Both are fundamentally worthless, and their value depends entirely on the Greater Fool theory. Actually, gold does have a few industrial uses, so it's actually worth something. People like to claim that bitcoin has value as a medium of exchange. That might be true for some kinds of illegal activity, but for above-board transactions, craptocurrency is far too unwieldy and unstable to be useful as a store of value.

[@dmach83]

His reply just proved to me that he actually doesn’t understand it at all …… And those are not Larrys words he borrowed them … no one trusts old Fink the Prof has that 100% spot on .. that part of the reply he truly knows the subject matter

[@costelloj70]

Love this guy, a great interview.

[@rickdeleroy]

How do I mimic this guy’s portfolio?

[@estring123]

aswath is very smart

[@kevinl20082008]

Awesome...too short.

[@sky301289]

He speaks well.

[@SchmittycocoPop]

I got nvda in 2017 because they had best gaming processor. Invest in what you know.

[@aroundandround]

The word “narrative” has now become a catch all term for unpredictable upside that caught everyone unawares.

[@DingoAteMeBaby]

If AI is really shorthand for computing that uses automated processes to distill data into highly parallelizable algorithms via matrix math, which is what GPUs use, then nvidia is in a good place. Given the potential slowing of moores law, it feels like these kind of parallel processors are going to be very important for a long, long, time. HOWEVER, everyone is jumping on the 'AI' train in the LLM sense, and there is an overestimation of it's potential use cases and applications. I don't think it will replace as many jobs as the media is piping up. The only reason LLMs work is because the internet provided a relatively structured limitless NLP data source, that does not apply to all of the really valuable uses for AI, such as highly specific skill niches and the computer vision approaches nvidia researches. For that you need more 3D visual data, and for that you need more relatively high-marginal cost (compared to internet/software) networked camera hardware in the world, which we do not yet have. The real issue I've seen from the inside is that, even with these new technologies, entrenched companies are not changing their culture/processes fast enough. In a capital-poor environment startups (who would use these new tools to structure their organization and culture with extremely minimal friction) are produced in less quantity. Thus the effective sticky adoption rate is going to be not so high.

[@robbrown4621]

What does Tom Lee say about NVDA?

[@DesmondMiles333]

You should've asked hime about LEI index in deep recession territory rather than Yield curve inversion.

[@pankajkulkarni3189]

when was this interview recorded?

[@CannyVen]

Shoutout to the Altcoin Daily community! $ESX tokens are gearing up for their presales and launch, and I'm loving their vision of tokenizing real estate. Keep an eye on this one - it's got potential!

[@bhawanisinghindia2287]

100% truth

[@valoriefalorie4223]

5:10 - starts about nvidia

[@waynecsmith5145]

Also what he does not mention is the stock market “internal mechanics” has self created some of our cyclicality…he can “guarantee” there “revaluation” in the future…

[@jerry.norman.52687]

The article may cite Aswath Damodaran's views and research to support the analysis of NVIDIA's valuation and artificial intelligence. There may be references to his research methodology and his expertise in finance.

[@chahalpawanpreet]

He said "I can almost guarantee it" - PhD or not they all end up sounding like FURUs but nonetheless great insight on new market discovery

[@RaphaelRRangel]

Thank you for bringing Prof. Damodaran, Prof G.! It was a great interview.

[@Yahniboy]

Didnt Damodaran a couple of months ago said on CNBC he would not own Nvda at these prices. Well it turns out he owns Nvda though he sold half his position

[@l4k]

What I wanted to know is his CAGR, that’s all that matters

[@proskillr]

Great podcast, but I do miss the more traditional prof g markets podcasts

[@JohnCorrUK]

Meatier content and less whinging about @Elon - what’s not to like?

[@eurostockoption]

28:51 someone gonna remix that dis on Larry Fink👏

[@acs2777]

This is how people misses out of great upside, fear spreading and I often see the behaviour from people who mentions that “hey I am not affected as I sold my shares “ but I think it’s to high valued yet they are all working today. You think being rich will give you more time and freedom yet this people are full time workers at some university.

[@waynecsmith5145]

Thank you! I have realized this a long long time ago…and are high 6 figure earners…they usually spend to their limit of income…

[@ferdinandmagellan9210]

Money is addictive and work gives people meaning

[@TheFinnmacool]

"....Fink and the experts have no idea what they're talking about." Couldn't agree more. And these fools, so many of them, are shaping our reality. Madness.

[@skibbydweez2647]

nvdia going to $800 !!!! Don’t miss out

[@valoriefalorie4223]

You predicted right!

[@skibbydweez2647]

@@valoriefalorie4223 ALSO HAVE SMCI TO $2000 END OF FEB!!!

[@pjamesbda]

The heart follows the mind. What is it you make (besides money)? This is where your heart is. Markets are for those who won't or can't make things; living second removed from real struggle. Safe? This is the great depravity of our age. We have lead Americans to the gaming table, while work becomes denigrated and wagering becomes the road to wealth. -Dennis Kucinich

[@MorrisDugan]

I did a bunch of things until the pandemic and the $600 tax reporting reporting rule killed them. You're also not taking into account the disabled and the retired.

[@pjamesbda]

@@MorrisDugan - Yes, that is true. And yet, ideas and the creation of them is a tangible good. I was referring to riding the market waves, never giving a thought for the struggling Plebeians generating the excess. While at the same time, they languish over inequality and poverty - all the while they feed the machinations. We have not advanced for 2000 years or more. Stuck baking donuts for millennia. It's absurd.

[@MorrisDugan]

@@pjamesbda The workers should get a financial stake in their place of employment, as well as a living wage.

[@alyst115]

8:00 I think people often overlook a key element of what make Nvidia a juggernaut over an AMD and thats the middleware market. Nvidia has put a lot of effort into developing and supporting robust firmware/middleware so that software developers can really maximize. Just look to gaming and see how bad an AMD driver is compared to Nvidia.

[@theopillay9908]

An absolutely awesome podcast, thanks so much for your incredible insights Aswath, and the Prof G team for your excellent knowledge sharing endeavours.👏🏼👌🏼🇿🇦

[@robbrown4621]

Question: Is Dr. Damodaran taking into consideration the use of Nividia chips in AI military use coming over the next decade? The US military will be spending a fortune on AI weapons... Please advise. Thank you.

[@WeaponGrade]

I'd not trade 1 Aswath with 1 Billion Cramers. Thank you Aswath. I've learned from you how to stay calm, rational and open minded. Now only if some profits would follow.....

[@MorrisDugan]

Cramer is too much like Kramer on "Seinfeld." He's an admitted showman, whereas Damodaran is an academic analyst with practical experience who's not trying to harvest clicks and page views.

[@WeaponGrade]

@@MorrisDugan yea, but a showman impersonating a financial advisor that people take seriously is dangerous. Not to mention his annoying voice. My cat goes and hides every time he comes on.

[@chiragmehta8212]

@@WeaponGrade😅😅😅😅 smart cat

[@MorrisDugan]

@@WeaponGrade I wonder if you could make money by shorting the companies that Cramer pushes the hardest, especially when their share price is already very high.

[@nikitakoritsky9548]

Little did he know back then :-D

[@catherinesalacuse3284]

How was Greece? Young man ? 👍🇫🇷🇺🇸

[@joshuatvernon]

The crispr technology could maybe become a market by itself one day

[@Martinit0]

First cash flows should be arriving this year

[@jmg8888]

Duh!! How could Prof G not know that San Diego is in "Southern" not Northern California?

[@AyyMacPattyWak]

I named my rouge on balders gate 3 aswoth damodaran

[@AstaKristjan]

What happened to SVB is really scary, and goes to show that no corporation, however big, is immune to collapse. I have always had a deep-seated mistrust for corporations. I have plans to pull out most of my money, but don't know what to do with $350k sitting idly. I'd like to go into the stock market, maybe. Any ideas?

[@BillAdamson-bp9ff]

All big corps are just a cohort of centralised system working together, and any damage to one can have a dangerous ripple effect on every other one. I learned a long time ago to not trust corporations. Most of my money is in the stock market and my businesses. I keep only what I need to spend in my checking account.

[@Erinmills98]

@@BillAdamson-bp9ff Ironically, these are the conditions in which life-changing money is made by those who remain calm, patient, and take controlled risks. Volatility goes both ways. The banks are in a big crisis. The market looks very shaky. The bigger the red candles, the bigger the green ones. I have made over $280k in the last 4 months by investing through my FA

[@RickMckee-nq4ni]

@@Erinmills98 Wow. I've heard similar success story from people who work with advisors. How do I get in touch with yours, please?

[@Erinmills98]

@@RickMckee-nq4ni Absolutely, I agree, and the markets are currently in a frenzy. The greatest time to observe them, learn more about them, and take advantage of opportunities to strike is now. My F.A, "Michelle Christine Parker," who has witnessed hundreds of market cycles over the past three decades, taught me this. She has an intuitive understanding of how things move, why they move, and what will happen next..

[@AndrianWiener]

@@Erinmills98 This information is valuable. I quickly searched her full name and her website appeared instantly, showcasing her impressive qualifications. Thank you for sharing.

[@robin212212]

I think some of the questions asked are silly; e.g. how would a finance prof know whether it would be wise for NVDA to vertically scale?

[@maryhadda8420]

And yet his answer made perfect sense.

[@robin212212]

@@maryhadda8420 how do you know? Do you work in high-tech chip production?

[@thecryptobunker]

The visceral reaction of bringing up crypto is noteworthy

[@bigk8294]

I think very few people understand the size of AI .

[@WiZ-vd9fs]

If everybody has it, no one has it. - insight!

[@finance7120]

Good to see glimpse of your Dorian Gray?

[@neilsmithcreditmanager]

I loved the Larry Fink insight. He is a guy with an $11T megaphone!Now that was digital gold