Nvidia's stock is not in a bubble because its valuation multiple has been compressing even as its earnings and guidance keep beating expectations, unlike a true bubble where the multiple would expand dramatically.
Josh Brown argues that Nvidia's falling P/E multiple despite strong earnings growth signals the opposite of a bubble — the market is discounting future competition rather than irrationally inflating the stock. ✦ AI generated
Josh Brown · The Compound · 2026-07-17 · original ↗
starts at this moment · 55:01
This is not a bubble. This would be a bubble if Nvidia's multiple had gone from 30 to 90 times earnings. Didn't happen. This is a discount to the market... it's a huge discount.
verbatim transcript · starts at 55:01
55:01earnings didn't happen this is a discount to the market >> it's a huge discount and like I I and I agree. I think competition is a big part of it. I mean, they were the first ones out of the gate to really own I'll call it the eight >> 90% market share and now they're not going to. >> Yeah. Right. >> Yeah. But I don't you know at the end of
55:17the day you know there's always a horse race and the leaders switch quite a bit. You know the government's invest in investment in Intel fascinates me too. But you know I think Nvidia is going to be a player for a very very long time. Um, and when I see this and other charts like it, I think there's just a concern, a not yet to be realized concern that
55:38the spending that's going on there might end a little bit sooner than people had originally predicted. But if the >> So that's where the earnings bubble comes from. The companies are over earning relative to what happens when this capex normalizes. >> That's exactly right. Yeah. Yeah. >> Which is a very re reasonable thing to be worried about. >> Can I ask something? I I keep hearing about the circular investing and the
56:01>> lack of free cash flow and everything. Let's just say Amazon and Google and Microsoft and all the big spenders stop spending. Doesn't that just shoot free cash flow right back up for them? But that's not the worry. The worry is I start a Neocloud. I say I am building a data center. I have money from Saudi Arabia and maybe the Norwegians and everybody uh private equity Apollo's in
56:25blah. So, I'm gonna build this data center and I'm going to start my own NeoCloud. Jensen Wang calls and says, "I heard the news. I think it's great. We would like to sell you GPUs." Y >> and by the way, we will financially backs stop those purchases. You don't have the capital yet. We know you're good for it because we see that you have all this backing and therefore Nvidia is
56:48going to book that chip sale to me and I'm either using money that indirectly comes from them or I'm backstopping that to raise money from someone else. Take that example times a thousand and everybody's lending andor equity investing in everyone else's projects and the concern is when the music stops all these people go for the chairs and a lot of people going to be left without a