Jensen Huang announced Nvidia will sell twice as many chips next year. Doubled the units. Not the revenue. Not the profit. The chips.
Retail traders heard this and immediately calculated what two times their current position equals. They forgot to ask what happens when supply doubles and demand doesn't. Supply and demand stopped being taught in 2019 when everyone decided stocks only go up because the Fed said so.
Huang's forecast points to massive growth for six more quarters. Six quarters. That's a year and a half. That's eighteen months of you checking your portfolio every morning and wondering why the stock price didn't also double. You thought doubling chips meant doubling stock price. You think correlation equals causation. You think technical analysis is when you zoom out to the one-year chart.
Selling twice as many chips means building twice as many chips. Building twice as many chips means twice the capital expenditure. Twice the capex means half the free cash flow. Half the free cash flow means your DCF model just became a DC model. The F left. It saw what you were doing with those growth assumptions and it walked out.
The absolute best part is Nvidia already sells chips to everyone who needs chips. Data centers bought them. AI companies bought them. Crypto miners bought them until they didn't. So who's buying the second helping? The same customers, apparently. They're going to buy twice as much. Because that's how business works. You just keep doubling forever. Exponential growth into infinity. No ceiling. No competition. No laws of physics.
Every semiconductor cycle ends the same way. Overbuilding. Excess inventory. Price cuts. But this time is different because Huang said so at a conference and you wrote it down in your investing journal next to your vision board.
The stock will probably go up anyway because nothing means anything anymore and the market rewards confidence over arithmetic.
Photo by Mariia Berezovsky on Unsplash
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