Gerstner argues NVIDIA at $400 trades at 20x earnings, lower multiple than many cyclical stocks.
“But the fact of the matter is on consensus forecast for next year, it's trading just over $20 or 20 times earnings. It's trading at a lower multiple than many cyclicals in the public market.”
Gerstner says Meta nearly tripled earnings per employee in fifteen months.
“They've nearly tripled their earnings per person working at the company in in over that fifteen month period of time.”
Gerstner says NVIDIA EPS was forecast at $5.70 but ended up at $25, far exceeding expectations.
“The EPS at the beginning of last year, the earnings per share was expected to be $5.70, and now it looks like it's gonna be $25.”
Gerstner states 54% of software companies missed guidance expectations, worst quarter since 2022.
“54% of software companies disappointed in the quarter. And that's the worst quarter I think we've had since 2022 in terms of their view as to the future.”
Gerstner reports S&P earnings excluding Mag Seven came in below expectations with quarterly shrinkage.
“in the quarter, if you back out, you know, mag seven, we're coming in, below expectations. Right? You're actually seeing earnings shrink on a quarter over”
Gerstner's Nvidia estimate is closer to $5 per share, ahead of consensus since fall 2022.
“we're we're closer to $5 a share. We've been ahead of the consensus estimate since the fall of twenty two.”
Gerstner states consensus Nvidia estimate for next year is around $3.50 per share.
“the consensus estimate for next year for Nvidia, I think is around $3.50 per share.”
Gerstner notes NVIDIA consensus is 65% earnings growth in 2025 and 30% in 2027 at 25x multiple.
“The consensus estimate this year, I think, is that they're gonna grow earnings about 65%, maybe 30% in 2027. You said it's an earnings driven market, so they don't need to expand multiple.”
Gerstner notes memory and logic stocks trade at five times fully taxed earnings with flat to down multiples.
“if you look at the multiples, the fully taxed gap earnings of those businesses, the multiples are actually flat to down, Scott. They're they're trading at five x fully taxed earnings.”
Gerstner says Snowflake raised full-year guidance by more than Q1 beat due to AI accelerating core business growth.
“They took up their full year guide by more than their q one beat. And the massive beat really came from these two trends.”
Gerstner reports Snowflake beat consensus with 33% growth versus 27% expected and raised full year guidance.
“33% growth, accelerating growth versus consensus of 27% growth. They took up their full year guide by more than their q one beat.”