Zed Francis

It's very much a barbell industry within the same exact sector.

So you have NVIDIA trying to become less cyclical.

They're definitely the least cyclical of the group.

And the memory guys on the other side are the most cyclical.

So what does that mean in terms of valuation and how you think about the business?

Well, NVIDIA has more...

forecastable revenues in the out years, beyond, you know, years one, two, three.

And so because of that, years ago, they were the first mover in terms of valuation because people gained confidence in the, you know, out years, you know, the years three plus and their ability to produce those revenues

And thus, you get a higher valuation.

If folks believe that a decent amount of your ability to produce those earnings is actually reoccurring, then you're naturally going to get a higher valuation, which is exactly what happened with Apple, again, from kind of 2013 through live.

It went from a teens PE stock to a mid-20s plus simply because the confidence of those reoccurring revenues were grown, and NVIDIA is trying to follow that path.

opposite side, those memory folks, they have a cliff, right?

It is a purely commoditized business where right now they're on the right side of the supply-demand dynamic where they're raising prices dramatically, expanding those margins.

But the market's belief is there is a hard cliff where eventually they will go back to where they were before.

And that's why when you look at a

You know, a micron, their forward P is like a 12-ish.

But ultimately, that's because, well, we have confidence in the next 18, maybe 24 months of earnings.

But after that, very, very little confidence.

So it's all about discounting what we know right in front of us versus that longer-term kind of DCF valuation of something with reoccurring revenues.

Yeah, I mean, Ford valuation in mid-20s is about in line with the S&P, technically a little lighter than the market as a whole, so it still has a little bit of that cyclicality priced into it.