AI is NVIDIA’s third climb up a steep slope.
First came gaming in the late 2010s.
Then cryptocurrency.
Now artificial intelligence.
Each wave pushed revenue growth above 50% & with it, P/E1 ratios surged. P/E ratios rose before the revenue growth materialized.
There’s a four-quarter offset between P/E ratio & TTM2 revenue growth. When you shift revenue growth forward by a year, the correlation with P/E jumps to 0.80.
Two revelations this week have shaken the narrative in AI : Nvidia’s earnings & this tweet about Gemini.
The AI industry spent 2025 convinced that pre-training scaling laws had hit a wall. Models weren’t improving just from adding more compute during training.
Then Gemini 3 launched. The model has the same parameter count as Gemini 2.5, one trillion parameters, yet achieved massive performance improvements. It’s the first model to break 1500 Elo on LMArena & beat GPT-5.1 on 19 of 20 benchmarks.