NVDA is a bearish long-term hold because circular financing makes margins unsustainable and revenue growth will drop significantly in 2027.

Meanwhile, you have Nvidia coming out with earnings, and you know, as far as the beats, everybody knows they come in with the beats and beats and beats and people are like looking at the stock price and it's just like Nvidia longs were in depression.

Now the stock's up a few percent after hours, but at first, man, it's just like, "Oh my gosh, like can the stock ever go up?" Right? It's just a little frustrating cuz the numbers just come in, they're just great, great, great.

Uh there's going to be something very interesting I have to show you in regards to Nvidia's financials here today, okay? And the third third subject we'll get into is Nvidia. What is, you know, we'll go through the Nvidia numbers.

I I got something very important I have to show you in regards to Nvidia's income statement, okay?

Next up here, let's talk NVIDIA. should we have expected anything less? No, of course not. I told you guys the numbers are going to be bangers. I told you the guide's going to be likely several billion dollars ahead of where analysts are at.

This is This is should come as no surprise. A plus plus grading income statement here, right?

Revenue is up 106% cost of revenue up 87% gross profit up 113% there. R&D is up 64%. SG&A is up 21%. That's way smaller numbers than revenue or gross profit, so you're in the winner winner chicken dinner.

Uh total operating expense is up 55%. It's nothing compared to 113% profit growth, right? Operating income up 124%. They had other income up 181%. Net income up 126%. Diluted EPS up 128%.

Cuz look at pull up what I graded income statement of NVIDIA last year or last year Last Last quarter, right? A++ grade. But, look at the difference here. Here, the cost of revenue is up 18%.

Here, the cost of revenue is now up 87%. So, the revenue growth is like, okay, this is great. Revenue growth is much stronger than it was, right? It was 85% last quarter. This quarter was 106%.

But, the percentage growth on cost of revenue going up is so much larger that that has to be like factored in and considered here.

my only worry with with Nvidia here on the financial front is I do worry if in the next few quarters, eventually cost of revenue is going to start going up at a faster clip than revenue.

It's a potential. It's certainly not a guarantee, but it's a potential that this could end up starting to grow faster than revenue, right? Now, keep in mind, it's a much smaller line item, so the gross profit growth would still be phenomenal.

But, you know, it's one of those things you don't want to really see out there in regards to Nvidia, right?

Now, Nvidia stock is up about 4%, right? And you might say, how does Nvidia make any dang sense, right? I mean, the growth rates are insane. I mean, you know, the guided great The guidance was great, right?

You look at these numbers, like, oh my gosh, like, 106% revenue growth, 113% gross profit growth, 128% diluted EPS growth. You would think a company like that would be trading at a forward P of 60, 90, 120, right?

But, there's Nvidia trading at a forward P of probably 17, somewhere in there ballpark, right? It's like, how? How does that make sense?

There's a massive amount of circular financing going on right now, where Nvidia lends money to this company, and then that company spends money right back at Nvidia on its chips, right?

There's a ton of that sort of stuff going on right now, right?

They're just spending every single dollar they possibly can on Nvidia chips right now, right? That's not likely sustainable over the long term, right? And so, what happens when a slowdown happens?

Margins compress substantially, which then plummets net income, plummets earnings per share. And so, that's a cycle we're going to have to go through. It's not a cycle right now, but once you get to 2027, it's that much closer, right?

And so, that's why people aren't willing to, cuz, you know, and I even on CNBC today, you know, the Wall Streeters were talking like, "How people not willing to pay up for Nvidia?"

It's like, because they understand that no one wants to be left holding the bag in this situation, right? And Nvidia's margins are not sustainable over the long term. Are they sustainable, you know, for the next 12 months?

Probably. Probably. Are they sustainable over the next, you know, three, you know, four years? No. Not in my opinion.

And so, that's something that has to be factored in here, and that's why you're not getting people to run out there and say, "Oh my gosh, I got to buy every Nvidia share I can right now," right? That's what's going on here.

understand Nvidia is a huge weight, 7 and 1/2% weight for the S&P 500, right? that Nvidia stock is moving up. It could push semiconductor stocks in general up, those sorts of things.

Nvidia's going to go through a period where their revenue growth is going to be really lame next year in 2027, like really lame. Like I don't think people are quite factored in how lame Nvidia's revenue growth is going to be next year.

Nvidia's numbers are going to be lame next year. And Nvidia's going to be battling it out for probably 15% revenue growth next year, right? Maybe 20% uh if they're lucky. And you know, everybody's gotten used to 100% plus revenue growth for Nvidia.

So then all of a sudden you come in with maybe 20% revenue growth, people are like ugh, right?

Right? You're going to get some excitement coming in SaaS. You got Nvidia numbers out here. People are continuing to spend. That is what it is. Right? But the moral of the story is here, whether Nvidia had come in and beat these numbers, missed these numbers, if they beat by 4 billion instead of 3 billion, or you know, all that stuff, focus on long term here, ladies and gentlemen.