As a reminder that we should always be humble, and always realize that a high degree of certainty invites the laughter of the crowd… how about that NVIDIA quarter last week?

I didn’t know whether NVIDIA would offer up another “beat and raise” update, with optimistic talk about the market for their high-end data center chips and send the stock soaring again, or they’d say something cautious about the speed bumps that were coming fast and furious in the form of competition and government restrictions on selling those chips to China, and bring down the shares in dramatic fashion… but I was quite confident that their earnings call would be a market-driving event, and that there would be a big move either up or down when the news came out.

Instead, investors apparently had it right all along. NVIDIA’s stock in the week before earnings was “pricing in” almost exactly what the company was going to say, which was very positive but not stunningly so, and the share price hardly moved at all after earnings (it drove up to $500 in anticipation of the earnings report, and gave some of that back to settle around $480, but the shares are now just back to where they were after the August earnings report, and have been bouncing around between $400-500 since June).

A blah, “nothing to see here” response from investors was the one thing I thought was very unlikely, but that’s what happened.

Just a reminder: I don’t know the future, and you don’t, either.

And the market is better at prediction than analysts are.

Especially when it comes to NVIDIA, where analysts are pretty much always very wrong with their estimates, and typically playing “catch up” with the market.

What was the actual quarterly update, and does it change our thinking on NVIDIA?

Well, to answer the second part of the question first, “not really.” NVIDIA is quickly growing into its wild valuation, as long as you believe that their revenues will keep growing, even at a much slower pace, and that their margins will remain near these historically elevated levels for at least a couple years… but those are also pretty big qualifiers, and the reliance on unprecedented profit margins means that the risk remains very high even if there’s not a bad revenue “shock” in the future.

Let’s dig into the numbers a ...