But they do need to be at quite a high level…
If NVIDIA’s net margin stays at 50% forever, return on equity (ROE) is 100%, the terminal growth rate is 4%, and the investor’s required rate of return is 9% (pretty standard in the US), NVIDIA would need to generate approximately $620 billion in revenue. Compared to about $250 billion now.
Though that’s not a completely impossible thought if trillion-level investments actually materialize.
But as @Pohjolan_Eka challenged there, one can have many opinions on the final sustainable level for the time being.
Up until now, the market has constantly underestimated how massive this investment cycle will become, which is visible in the “staircase-like” behavior of NVIDIA’s forecasts and the fact that, for example, memory stocks only started skyrocketing about a year ago.
This discussion can be approached from the perspective of technological sustainability, but also from an economic perspective. As I wrote above, the numbers are so large that the whole world will soon have to start digging deep into its pockets if the current trend continues. No wonder the stock market isn’t quite buying Jensen’s comment about $3–4 trillion in investments, and NVIDIA isn’t yet priced on the assumption that its normalized revenue would be over a trillion a year.