NVIDIA Corporation

🇺🇸NASDAQ Global Select
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NVIDIA Corporation stock analysis NVDA overview
Somewhat Bullish +50

Prominent Tech Investor: ‘When We Were Buying Nvidia in 2023, We Were Paying 4 Times Earnings’

📈 Alex Sacerdote of Whale Rock Capital bought Nvidia in 2023 at a forward multiple of 4x earnings based on projected profits 2-4 years out.

🚀 He argues that short-term market myopia causes investors to systematically underprice companies at the base of an S-curve before adoption inflects.

💡 Sacerdote's framework focuses on three elements: S-curve positioning, competitive advantage, and underappreciated earnings power.

📊 Nvidia traded as low as $14.28 in early 2023, ending the year near $49.44, while fiscal 2026 EPS is projected at $4.77.

🔥 Q1 fiscal 2027 alone is expected to deliver $1.87 EPS on revenue of $81.6 billion, with Data Center revenue growing 92%.

🚗 Sacerdote also bought Tesla in 2019 for 5x earnings and Apple for 4x earnings based on future earnings power rather than trailing P/E.

📦 He describes Amazon's AWS profits as being effectively "free" because they were buried under retail losses for years prior to inflection.

🧠 Sacerdote relies on intuition and anecdotal evidence like watching AWS pack a Gartner IT Symposium ballroom to spot demand signals before financials reflect them.

⚠️ He advises investors that it is okay to miss the first 100% of an S-curve because the majority of compounding lies ahead.

📉 The hardest part of this strategy is navigating the long flat line where data lags behind the actual strategic inflection point.

🎯 Investors must correctly identify which S-curves actually inflect, as many never do and forward projections can be wrong.

🧠 Survivorship bias makes successful outcomes like Nvidia's look more obvious in hindsight than they were at the time of investment.

📉 The framework requires work to find the best opportunities despite being a powerful lens for technology investing.

🏦 SoFi Active Invest is offering new users up to $1,000 in complimentary stock with a $50 deposit.

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Bullish Signals
  • Alex Sacerdote of Whale Rock Capital purchased NVIDIA in 2023 at only 4 times forward earnings power, significantly undervalued relative to the massive growth projected for its AI infrastructure.
  • NVIDIA's fiscal 2026 EPS is projected at $4.77, with Q1 fiscal 2027 alone delivering $1.87 on revenue of $81.615 billion, up 85.23% year over year.
  • Data Center revenue for NVIDIA reached $75.246 billion in the referenced period, representing a robust 92% growth rate that validates the long-term investment thesis.
  • The article highlights that missing the initial 100% of an S-curve is acceptable because the majority of compounding value lies ahead once adoption inflects from trickle to flood.
  • NVIDIA traded as low as $14.28 at the start of 2023 before ending near $49.44, demonstrating significant price appreciation that aligns with the S-curve investment framework.
Risk Factors
  • The article explicitly states that investors following the S-curve strategy must correctly identify which S-curves actually inflect, noting that many never do.
  • It warns that forward projections used to justify high valuations (like '4 times earnings') can be wrong.
  • Survivorship bias is cited as a risk, making successful outcomes like Nvidia's appear more obvious in hindsight than they were at the time.
Full Analysis
Alex Sacerdote, founder of Whale Rock Capital, discusses his investment strategy centered on identifying companies at the base of an S-curve before their adoption inflects from trickle to flood. He highlights that when he purchased Nvidia in 2023, Tesla in 2019, and Apple prior to its services flywheel gaining respect, he was paying multiples based on forward earnings power projected two to four years out rather than trailing P/E ratios. Specifically regarding Nvidia, Sacerdote notes the stock traded as low as $14.28 at the start of 2023 before ending near $49.44, positioning buyers for a future where full-year fiscal 2026 EPS reached $4.77 and Q1 fiscal 2027 delivered $1.87 on revenue of $81.615 billion, with Data Center revenue growing 92% to $75.246 billion. Sacerdote argues that short-term market myopia causes investors to underestimate companies positioned at the base of an S-curve where growth appears modest before accelerating rapidly. His framework relies on three elements: S-curve positioning, competitive advantage, and underappreciated earnings power, often requiring intuition and anecdotal evidence like watching AWS pack a Gartner IT Symposium ballroom rather than trusting lagging income statement data. He references Andy Grove's concept of strategic inflection points and Peter Lynch's advice to "white out the chart," emphasizing that it is acceptable to miss the first 100% of an S-curve because the majority of compounding lies ahead once the inflection point arrives. The article concludes with a caveat that investors must correctly identify which S-curves actually inflect, as many never do, and notes that survivorship bias makes successful outcomes like Nvidia and Amazon appear more obvious in hindsight than they were at the time. While the piece includes promotional content for SoFi Active Invest offering new users up to $1,000 in stock, the substantive reporting on Sacerdote's investment thesis regarding Nvidia's valuation and growth trajectory remains intact and relevant.