By Thomas Richmond
Publication Date: 2026-06-09 18:54:00
Quick Read
-
Sacerdote paid 4x earnings for NVDA and 5x for TSLA by targeting earnings power 2 to 4 years out rather than relying on the stock’s headline P/E.
-
Short-term market myopia systematically underprices companies at the base of an S-curve, just before adoption inflects from trickle to flood.
-
Sacerdote says missing the first 100% is fine, because if the S-curve thesis holds, the majority of compounding still lies ahead.
-
It sounds nuts, but SoFi is giving new active invest users up to $1,000 in stock for a limited time, and all it takes is a $50 deposit to get started. See for yourself (Sponsor)
Alex Sacerdote, founder of Whale Rock Capital, dropped a line on a recent Invest Like the Best episode that stopped listeners cold: “When we were buying Nvidia in 2023, we were paying 4 times earnings. When we bought Tesla in 2019 for the car S-curve, we were paying 5 times earnings. When we were owning Apple, we were paying 4 times earnings. When we bought Amazon for AWS, we were getting it for free.”
Those figures reflect his forward, S-curve-based earnings-power framework, referring to the price he paid relative to the much larger profits he modeled the businesses would generate 2 to 4 years out.
The Exponential Mispricing Idea
Sacerdote’s core insight is that “the world doesn’t think exponentially, and they’re so focused on the next year or the next quarter.” In his view, that short-term mindset causes investors to consistently underestimate…