Nvidia's market cap at $4 Trillion, almost as much as India's GDP. Where does it go from here?

Nvidia's market cap has crossed $4 Trillion. Interestingly, India's GDP stands at $4.2 Trillion, and its Buffett Indicator at 1.33.

Buffett Indicator is the ratio of the total market cap of all listed companies in an economy, and the GDP of that country. It's a rule of thumb to determine whether a country's markets are over, or undervalued. If the BI is ~.75, the market is undervalued. Good time to buy. If it's over 1.5, it's overvalued. India, at 1.33 is "almost" overvalued. Which is to say, it's pretty safe. The BI for US is currently 2.07. Which means it's "playing with fire".

That said. Grossly overvalued or not, Nvidia's market cap has crossed $4 Trillion, while the market cap of all companies of India combined - is at $5.5 Trillion. That's Tatas, Ambanis, Adanis, Birlas, Bhartis, Hindujas, Mahindras and all Indian PSUs put together.

Does that sound alright? It's certainly very interesting.

Mr. Peter Thiel had said Nvidia to him looked like a "temporary monopoly" and even though "all the profits in AI are practically being made by just one company", i.e. Nvidia, its situation essentially depends on other companies catching up on chips. Which, according to him should happen, sooner or later.

Now Open AI just got chips from Google. A small pilot. A nothing burger. But is it possible that some of these pilots work at scale and prove to be worthy challengers to Nvidia's dominance? According to Mr. Thiel, it is.

But then he also said that Silicon Valley doesn't know much about chips, and neither does he.

Now if there's someone in the world who's literally never been wrong in life, it's Mr. Thiel. And I take his words very, very seriously. His track record is just extraordinary.

From founding Paypal and firing Mr. Musk because he was opposed to its sale to Ebay (thereby pocketing a cool exit), to investing in Facebook when it was worth $5 Million (and exiting when it was worth over $100 Billion), to starting Palantir (which most people don't even understand), to buying Bitcoin in 2012 and exiting right before its crash in 2017, to supporting Mr. Trump in 2016 and bailing out on him in 2020, and so on... Mr. Thiel has basically never been wrong.

Is Mr. Thiel wrong about Nvidia, though? Or is it just too early to say. I don't know. But certainly, the thesis isn't outrightly dismissable.

One thing Mr. Thiel hasn't seem to have factored in as far as his Nvidia thesis is concerned, is the legendary founder that is Mr. Jensen. On Nvidia's founding, he said, "It's interesting that Nvidia started in 1993, because that's the year everyone smart stopped looking at electrical engineering as a career. Everyone just shifted to software because that was the centre of all the attention. So in a way, it was the worst time to start a semiconductor company (because of opportunity cost), but also the best - because you wouldn't have a lot of competition".

Doesn't that make Mr. Jensen the key component of Nvidia story? Mr. Thiel has famously said, “Never bet against Elon Musk”. Should that courtesy be extended to Mr. Jensen as well?

Maybe, maybe not. Interesting times!

Mr. Jensen on the climb.

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