WASHINGTON — A federal magistrate judge on Thursday angrily accused Justice Department prosecutors of trampling on the civil rights of people arrested during President Trump’s law enforcement surge in the nation’s capital.
Judge Zia Faruqui, a former federal prosecutor, said leaders of U.S. Atty. Jeanine Pirro’s office have tarnished its reputation with how they are handling the deluge of cases. He said Pirro’s office is routinely bringing cases that don’t belong in federal court and needlessly keeping people in jail for days while they evaluate charges.
“It’s not fair to say they’re losing credibility. We’re past that now,” Faruqui said. He later added, “There’s no credibility left.”
The judge lambasted Pirro’s office during a hearing at which he agreed to dismiss the federal case against a man accused of threatening to kill Trump while in police custody. The defendant, Edward Alexander Dana, spent more than a week in jail before a federal grand jury refused to indict him.
It is extraordinarily rare for a grand jury to balk at returning an indictment, but it has happened at least seven times in five cases since Trump’s surge started nearly a month ago. Faruqui said it is ironic that an occupying force is at the mercy of the occupants” serving on the grand juries.
Pirro has been critical of Faruqui, one of four magistrates at the district court in Washington. On Thursday, the top federal prosecutor for Washington responded to Faruqui’s latest remarks by saying the judge “has repeatedly indicated his allegiance to those who violate the law and carry illegal guns.”
“This judge took an oath to follow the law, yet he has allowed his politics to consistently cloud his judgment and his requirement to follow the law,” she said in a statement. “America voted for safe communities, law and order, and this judge is the antithesis of that.”
Faruqui said there is no precedent for what is happening at the courthouse over the last few weeks. He said Trump administration officials are frequently touting the arrest figures on social media with seemingly no regard for how the arrests are affecting people’s lives.
“Where are the stats on the people illegally detained?” he asked.
Assistant U.S. Atty. Conor Mulroe said prosecutors from Pirro’s office are working around the clock on the influx of new cases.
“You are busy because you all have created this mess,” he told Mulroe. “I’m not saying it’s your problem. It’s your office’s problem.”
Mulroe was the only representative of Pirro’s office who attended Thursday’s hearing. Faruqui questioned why Pirro or her top deputies “don’t have the dignity to come here” and defend their charging decisions.
“That’s what leaders do,” he said.
The White House says over 1,800 people have been arrested since the operation started Aug. 7. Over 40 cases have been filed in district court, which hears the most serious federal offenses, including assault, gun and drug charges.
Dana was jailed for about a week after his arrest on Aug. 17. A different judge ordered his release on Aug. 25. On Thursday, Pirro’s office opted to drop the federal case against Dana but charge him with misdemeanors, including destruction of property and attempted threats, in D.C. Superior Court.
Dana’s attorney, assistant federal public defender Elizabeth Mullin, said prosecutors should have known that this case didn’t belong in federal court.
“A 15-year-old would know,” she said. “It was obvious from the outset.”
Dana was arrested on suspicion of damaging a light fixture at a restaurant. An officer was driving Dana to a police station when he threatened to kill Trump, according to a Secret Service agent’s affidavit. Dana also told police that he was intoxicated that night. Mullin said Dana’s “hyperbolic rambling” didn’t amount to a criminal threat.
Faruqui ordered prosecutors to file a brief explaining why they didn’t immediately inform him of its charging decisions in Dana’s case. The judge apologized to Dana “on behalf of the court” and suggested that Pirro’s office also owes Dana an apology.
Pirro said in an earlier statement that a grand jury’s refusal to indict somebody for threatening to kill the president “is the essence of a politicized jury.”
“The system here is broken on many levels,” she said. “Instead of the outrage that should be engendered by a specific threat to kill the president, the grand jury in D.C. refuses to even let the judicial process begin. Justice should not depend on politics.”
1 of 7 | In “Treason of Arnold” by C.F. Blauvelt (1874), American Gen. Benedict Arnold persuades British officer John André to conceal treasonous papers in his boot. On Aug. 30, 1780, Arnold betrayed the United States when he promised secretly to surrender the fort at West Point to the British army. File Image courtesy of the Library of Congress
Aug. 30 (UPI) — On this date in history:
In 1780, Gen. Benedict Arnold betrayed the United States when he promised secretly to surrender the fort at West Point to the British army. He fled to England where he died in poverty, and his name became synonymous with treason.
In 1918, Fanta Kaplan, a member of the Socialist Revolutionary Party, attempted to assassinate Russian Prime Minister Vladimir Lenin, shooting him twice. He survived wounds to each shoulder, one of which pierced his lung.
In 1945, Gen. Douglas MacArthur landed in Japan to oversee the country’s formal surrender at the end of World War II. MacArthur told United Press Japan’s “punishment for her sins, which is just beginning, will be long and bitter.”
In 1954, Hurricane Carol prompted evacuations along the North Carolina coast. The storm later battered states along the northern eastern seaboard and killed 72 people.
In 1963, a hotline was established between Washington, D.C., and Moscow, allowing President John F. Kennedy direct phone access to the Kremlin for the first time.
In 1983, Guion Bluford became the first Black American astronaut in space aboard the Challenger as part of the STS-8 mission. Bluford participated in four Space Shuttle missions, his final in 1992.
In 1994, the Lockheed and Martin Marietta corporations agreed to a merger that would create the largest U.S. defense contractor.
In 2003, more than 120 people, including prominent Shiite cleric Ayatollah Mohammad Baqir al-Hakim, were killed in a bomb attack on Iraq’s Imam Ali Mosque.
In 2003, a Russian K-159 nuclear-powered submarine was lost in the Barents Sea, claiming the lives of nine of its 10-member crew. Russian authorities blamed negligence by navy officials.
In 2011, two senior U.S. Justice Department officials charged with overseeing the failed government gun-smuggling “sting” operation dubbed “Fast and Furious” were replaced amid bitter congressional criticism of the mission. The plan was to pass thousands of weapons to suspected Mexican gun smugglers and trace them to drug leaders, but hundreds of firearms were lost, some showing up at crime scenes, including the 2010 slaying of a U.S. Border Patrol agent.
In 2021, the United States completed its evacuation mission at the international airport in Afghanistan, officially bringing an end to the longest war in U.S. history.
In 2024, Brazilian Supreme Court Justice Alexandre de Moraes ordered the suspension of the social media platform X across the country after it missed a deadline to name a local legal representative. The ban was lifted in October.
In just a few years, Nvidia has become the most valuable company in the world, and also one of the most profitable.
The S&P 500 and Nasdaq Composite are hovering around all-time highs. A big part of the rally is investor excitement for sustained artificial intelligence (AI)-driven growth and adjustments to Federal Reserve policy that open the door to interest rate cuts.
While investor sentiment and macroeconomic factors undoubtedly influence short-term price action, the stock market’s long-term performance ultimately boils down to earnings.
Nvidia(NVDA 1.10%) will report its second-quarter fiscal 2026 earnings on Aug. 27 after market close. Here’s why expectations are high, and why the “Ten Titans” stock could single-handedly move the S&P 500.
Since the start of 2023, Nvidia added roughly $4 trillion in market cap to the S&P 500. But it also added over $70 billion in net income — as its trailing-12-month earnings went from just $5.96 billion at the end of 2022 to $76.8 billion today. That’s like creating the combined earnings contribution of Bank of America, Walmart, Coca-Cola, and Costco Wholesale in the span of less than three years.
Nvidia’s value creation for its shareholders, and the scale of just how big the business is from an earnings standpoint, is unlike anything the market has ever seen. But investors care more about where a company is going than where it has been.
Nvidia’s unprecedented profit growth
Expectations are high for Nvidia to continue blowing expectations out of the water. Over the last three years, Nvidia’s stock price rose after its quarterly earnings report 75% of the time. Analysts have spent the last few years flat-footed and scrambling to raise their price targets as Nvidia keeps raising the bar. It looks like they aren’t making that mistake any longer — as near-term forecasts are incredibly ambitious.
As mentioned, Nvidia’s trailing-12-month net income is $76.8 billion, which translates to $3.10 in diluted earnings per share (EPS). Consensus analyst estimates have Nvidia bringing in $1 per share in earnings for the quarter it reports on Wednesday and $4.35 for fiscal 2026. Going out further, analyst consensus estimates call for 37.8% in earnings growth in fiscal 2027, which would bring Nvidia’s diluted EPS to $6 per share.
Based on Nvidia’s current outstanding share count, that would translate to net income of $107.7 billion in fiscal 2026 and $148.5 billion in fiscal 2027. Unless other leaders like Alphabet, Microsoft, or Apple accelerate their earnings growth rates, Nvidia could become the most profitable U.S. company by the time it closes out fiscal 2027 in January of calendar year 2027. These projections strike at the core of why some investors are willing to pay so much for shares in the business today.
The key to Nvidia’s lasting success
Nvidia can single-handedly move the stock market due to its high weighting in the S&P 500. However, its influence goes beyond its own stock, as strong earnings from Nvidia could also be a boon for other semiconductor stocks, like Broadcom. But the ripple effect is even more impactful.
In Nvidia’s first quarter of fiscal 2026, four customers made up 54% of total revenue. Although not directly named by Nvidia, those four customers are almost certainly Amazon, Microsoft, Alphabet, and Meta Platforms. So strong earnings from Nvidia would basically mean that these hyperscalers continue to spend big on AI — a positive sign for the overall AI investment thesis.
However, Nvidia’s long-term growth and the stickiness of its earnings ultimately depend on its customers translating AI capital expenditures (capex) into earnings — which hasn’t really happened yet.
Cloud computing hyperscalers are spending a lot on capital expenditures (capex) as a percentage of revenue — showcasing accelerated investment in AI. But eventually, the ratio should decrease if investments translate to higher revenue.
Investors may want to keep an eye on the capex-to-revenue metric because it provides a reading on where we are in the AI spending cycle. Today, it’s all about expansion. But soon, the page will turn, and investors will pressure companies to prove that the outsize spending was worth it.
The right way to approach Nvidia
Almost all of Nvidia’s revenue comes from selling graphics processing units, software, and associated infrastructure to data centers. And most of that revenue comes from just a handful of customers. It doesn’t take a lot to connect the dots and figure out just how dependent Nvidia is on sustained AI investment.
If the investments pay off, the Ten Titans could continue making up a larger share of the S&P 500, both in terms of market cap and earnings. But if there’s a cooldown in spending, a downturn in the business cycle, or increased competition, Nvidia could also sell off considerably. So it’s best only to approach Nvidia with a long-term investment time horizon, so you aren’t banking on everything going right over the next year and a half.
All told, investors should be aware of potentially market-moving events but not overhaul their portfolio or make emotional decisions based on quarterly earnings.
Bank of America is an advertising partner of Motley Fool Money. Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, Tesla, and Walmart. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Hi, and welcome to another edition of Prep Rally. I’m Eric Sondheimer. Let the bidding begin. A 15-year TV contract that the CIF signed with Time Warner Cable in 2011 ends in 2026. What will happen next?
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CIF seeks new TV deal
The California Interscholastic Federation is about to open up bidding for its television broadcast rights because a 15-year deal with Time Warner (now Spectrum) is ending on July 31, 2026.
Signed in 2011, the $8.5-million deal gave Time Warner Cable the rights to televise state championship games and playoffs. It turned out to be a boon for the CIF, because game rights fees for high school sports ended up declining. Charter Communications acquired Time Warner in 2016 and rebranded to Spectrum, which has struggled at times as to how to maximize its investment in the TV package. Spectrum recently signed a three-year deal to broadcast Southern Section games.
CIF executive director Ron Nocetti.
(Eric Sondheimer / Los Angeles Times)
This year, the final payment of $952,422 is being made and will go into the CIF general operating budget. The deal started with a $550,000 payment and has gone up 4% each year. The CIF, which runs high school sports in California, uses money from membership fees, championship events and corporate sponsorships for its budget. The TV package is the largest financial deal among the sponsorships and helps reduce dues charged to schools.
Executive Director Ron Nocetti said the CIF will soon initiate a request for proposals and put it out for bidding. The market has changed considerably since 2011, with online streaming coverage of high school events surpassing linear coverage.
It will be interesting to see which media companies decide to bid, how much money they are willing to pay and how long the contract might last.
Another contract ending next year is with SBLive, which originally was trying to compete with MaxPreps and help the CIF design a way for fans to get immediate scores from games. SBLive changed its focus, entered into a partnership in 2021 with The Arena Group and in 2024 joined Minute Media, which runs Sports Illustrated sites. MaxPreps has moved to take further control of the prep sports scene after being acquired in April by PlayOnSports, the owner of GoFan and the NFHS Network, which started streaming a national game of the week.
This changing world of high school sports offers opportunities for the CIF to expand its media reach but also possible pitfalls depending on how media companies view the future.
How it started
Eric interviewing Sophomore Tajh Ariza after a basketball game. Son of Trevor Ariza. Taken December 2022.
(Nick Koza)
Starting with John Elway as a high school student at Granada Hills High in the 1970s, my journey covering prep sports has been going on for 49 years. It’s been quite a journey.
My mission has always been to entertain, inform and make a difference. There’s no reason to quit something you enjoy as long as the challenges keep coming and the athletes keep getting better and better with personalities that make you laugh and cry.
The opening weekend of Southern Section football saw a terrific matchup of top 10 teams: Mission Viejo vs. Santa Margarita. It turned out to be a defensive struggle until Ohio State-bound quarterback Luke Fahey struck late in the third quarter with a 33-yard touchdown pass to Jack Junker to give the Diablos a 7-3 victory. Here’s the report.
Three Trinity League teams — Mater Dei, St. John Bosco and Orange Lutheran — traveled to Florida for games, and each one came home with a victory. Here’s the report. Mater Dei plays Bishop Montgomery on Friday at home. Bishop Montgomery went to Hawaii and lost to St. Louis in Honolulu 34-27 in a game that ended with 51 seconds left when players from both sides left benches. Here’s the report.
Huntington Beach showed off its passing attack in a win over Orange. Here’s the report.
Corona Centennial defeated Servite 42-14 to give coach Matt Logan victory No. 296 in his 29 years with the Huskies.
Granada Hills Kennedy quarterback Diego Montes, right, and Eagle Rock quarterback Liam Pasten stand next to each other after Kennedy’s 59-56 win on Friday night.
(Benjamin Royer / For The Times)
The best high school football game of the weekend belonged to City Section teams Kennedy and Eagle Rock in a battle of All-City quarterbacks. After more than three hours, 15 touchdowns and the game ending past 11 p.m., Kennedy prevailed 59-56 on a late touchdown by Diego Montes. Here’s the report on the drama.
Granada Hills’ Troy Versa makes interception in 50-16 win over North Hollywood.
(Craig Weston)
Granada Hills rushed for 420 yards with no passing yards or attempts in an impressive 50-16 win over North Hollywood. Here’s the report.
Birmingham knocked off Hart 24-14 in a sign the Patriots are clearly the No. 1 team in the City Section. Quarterback Kevin Hawkins ran for more than 150 yards and Jimmy Renteria had a touchdown on a fake punt, catching a pass and also recovered a fumble.
Crenshaw defeated Fairfax 37-6 to give coach Robert Garrett victory No. 291.
Teams will be playing Thursday this week, with Dorsey at Carson a big one for future playoff seedings. Also Hamilton opens up its new stadium Thursday against Gardena Serra.
These three City Section football teams have forfeited their opening games: Dymally, Maya Angelou and West Adams. Sotomayor may not have a team this season. No Sotomayor games scheduled until Oct. 3. Teams can either take forfeit or schedule another opponent.
JSerra is unbeaten and looking like a challenger to Orange Lutheran. The Lions won their own tournament championship with a 19-0 win over Carlsbad.
The JSerra Girls Flag Football team remained undefeated and claimed the Surf Division championship at the inaugural Surf & Turf Invitational on Saturday, as the Lions blanked the Carlsbad Lancers 19-0 in the title game at JSerra Catholic High School.
Redondo Union hosts Long Beach Poly on Tuesday in a big nonleague match in preparation for a showdown against Marymount on Sept. 2.
Prep talk
Athletic trainer Jonathan Rivas of Culver City helped save an athlete who went into cardiac arrest last spring.
(George Laase)
Every day, there’s positive information coming from high school sports. That’s Prep talk. Here are last week’s stories.
Athletic trainer Jonathan Rivas saved an athlete last spring in cardiac arrest. Here’s a report.
Mira Costa’s special teams trio of punter Jackson Shevin (left), snapper Jackson Reach and kicker Nico Talbott.
(Eric Sondheimer / Los Angeles Times)
Mira Costa has a trio to make its special teams pretty good this football season. Here’s a report.
Harvard-Westlake started the girls’ volleyball season 7-0 under a first-year coach. Here’s a report.
John Michael Flint is quite a two-sport star at Bishop Diego with a 38-inch vertical leap. Here’s a report.
Ty Plinski of Corona Centennial became a media sensation with his one-handed catch on Friday night. Here’s a report.
Notes . . .
High school sports participation has risen to record levels aided by one of the new sports, girls flag football. Here’s the report. . . .
Last season’s Southern Section singles tennis champion, Sophie Suh of Orange Lutheran, will not be playing for the team this season. The sophomore will be focusing on the International Tennis Federation circuit. . . .
Grant Leary of Crespi won the Southern Section individual golf championship. He’s also a photographer for the Yearbook.
(Eric Sondheimer / Los Angeles Times)
Crespi golfer Grant Leary, the winner of the Southern Section individual title last season, has committed to San Jose State. . . .
The Downey vs. Warren football game on Oct. 24 has been moved to Dignity Health Sports Park at Cal State Dominguez Hills at 7 p.m. . . . .
Richard Schroeder is the new baseball coach at San Marcos. . . .
Beverly Hills basketball coach Jarvis Turner announces he is stepping down as coach. A tough loss to the basketball community. pic.twitter.com/Ulj8OgXreR
After 16 years as basketball coach at Beverly Hills, Jarvis Turner announced he has stepped down. . . .
Orange Lutheran girls water polo coach Brenda Villa has resigned to become associate head coach at Stanford. She’s a former Olympian and won two Open Division championships coaching the Lancers. . . .
Omari Cuffe, a 6-foot-4 junior basketball player who’s played sparingly the last two seasons at St. Pius X-St. Matthias, has transferred to Loyola. So has senior guard Deuce Newt from Campbell Hall. Newt started at times. Loyola has a new coach, Cameron Joyce. . . .
St. Francis basketball coach Todd Wolfson said his school has received a 7-foot-4 transfer in Cherif Millogo from Burkina Faso. Mater Dei has transfers from IMG Academy and the state of Oregon. . . .
Corona del Mar water polo standout Nathan Simoncelli has committed to USC. . . .
Pitcher Colten Rainer of Royal has committed to UCLA. He was throwing in the 90s this summer in a major improvement. He’s the younger brother of former Harvard-Westlake star Bryce Rainer, a first-round pick of the Detroit Tigers last season. Other UCLA commitments include pitchers Garrett Jacobs (Mira Costa) and Robert Zimmerman (Redondo Union) and outfielder Jaden Jackson (St. John Bosco). . . .
Rob Loehle is the new boys basketball coach at Simi Valley. . . .
Nareg Kopooshian, head coach of AGBU, has been appointed as the head coach of the FIBA Armenia U16 National Team by the Armenia Basketball Federation. The Eurobasketball competition is scheduled for the summer of 2026. . . .
Pitcher Jake Chung of Harvard-Westlake has committed to Brown.
From the archives: Lars Nootbaar
St. Louis Cardinals’ Lars Nootbaar celebrates with teammates in 2021.
(ASSOCIATED PRESS)
Former El Segundo and USC standout Lars Nootbaar has been in the major leagues for the St. Louis Cardinals since 2021.
He was a much decorated athlete during his days at El Segundo as the school’s quarterback in football and star baseball player.
From Texas A&M, a story on how youth sports can create future leaders or future cheaters.
From the Los Angeles Times, a story on how Carson Palmer views coaching high school football.
From the Daily Pilot, a story on two Huntington Beach surfers creating a documentary.
From the Washington Post, a story on premium seating in high school sports.
From the Los Angeles Times, a question and answer with former USC quarterback and Orange County legend Todd Marinovich.
Tweets you might have missed
True freshman Bear Bachmeier is going to start at QB for Brigham Young. Here’s a profile from 2023 that explains his talent and instincts. https://t.co/oAt91fNknt
The Mission League keeps getting stronger in all sports. Arriving at Harvard-Westlake is freshman Calvin Portley, who’s run a 10.74 100 meters. Also plays baseball, so beware catchers trying to throw him out stealing.
Who knew that cutting hair has become such a lucrative business for high school students. Besides Eagle Rock All-City QB Liam Pasten cutting his teammates’ hair, Kennedy All-City QB Diego Montes gets his hair cut by receiver Miguel De La Torre. There’s an MTV show in this.
Here’s a first: No fight reports from the officials in City Section 11-man football in the opening week. But there was one fight for girls flag football. The boys behaving. The girls, well . . .
Have a question, comment or something you’d like to see in a future Prep Rally newsletter? Email me at [email protected], and follow me on Twitter at @latsondheimer.
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Nvidia is priced for perfection in a market and trend that are anything but perfect.
Arguably the most important data release of the entire third quarter is just days away. Following the closing bell on Wednesday, Aug. 27, Wall Street’s largest publicly traded company, and the innovative leader fueling the evolution of artificial intelligence (AI), Nvidia(NVDA 1.65%), will report its fiscal second-quarter operating results (its fiscal year ends in late January).
No technological advancement has been hotter on Wall Street than AI. Empowering software and systems with AI so they can make split-second decisions and grow more efficient over time without human intervention is a game changer that can accelerate growth in most industries around the globe. In Sizing the Prize, analysts at PwC pegged the economic impact of AI at $15.7 trillion come 2030.
While an approximately 1,100% increase in Nvidia’s stock since the start of 2023 signals that the company is firing on all cylinders, a case can be made that the face of the AI revolution is priced for perfection in a market and trend that are anything but perfect. Despite its near-parabolic ascent, Nvidia will likely struggle to live up to Wall Street’s sky-high expectations on Aug. 27.
Image source: Nvidia.
Margins will be in the spotlight and likely act as a drag
In terms of AI-graphics processing units (GPUs), Nvidia has been the kingpin. Its Hopper (H100) and Blackwell GPUs have been deployed more than any other chips in high-compute data centers, with the respective compute capabilities of Nvidia’s hardware standing tall when compared to the competition.
The law of supply and demand states that when demand for a good or service outpaces its supply, the price of said good or service will climb until demand tapers. With an impressive backlog for its AI-GPUs, Nvidia has been able to command a premium price for its hardware, which in turn sent its generally accepted accounting principles (GAAP) gross margin to a high of 78.4% during the first quarter of fiscal 2025. As long as this AI-advanced chip scarcity persists, Nvidia’s gross margin is golden.
The problem for Nvidia is that it’s no longer the only rodeo in town. Advanced Micro Devices and China-based Huawei are external competitors that are actively ramping up production of their data-center chips. However, the biggest threat to Nvidia’s GAAP gross margin potentially comes from within.
Nvidia’s top customers, in terms of net sales, have consistently been members of the “Magnificent Seven.” Most of these leading clients are internally developing AI GPUs and solutions to use in their respective data centers. Even though these chips are no threat to Nvidia’s compute advantages, they are considerably cheaper and not backlogged like Blackwell. In my view, it’s inevitable that internal chip development will cost Nvidia precious data center real estate.
More importantly, this internal development is working against the AI-GPU scarcity that Nvidia has held so dear. As the insatiable demand for AI-accelerating chips calms, Nvidia should see its pricing power and GAAP gross margin fade over time. We’ve already been witnessing steady gross margin erosion for more than a year.
Nvidia will have a difficult time justifying its valuation in multiple respects
In addition to gross margin being front and center, Nvidia is going to have a near-impossible task of justifying its valuation premium amid a historically pricey market.
To be abundantly clear, I believe Nvidia is deserving of a valuation premium thanks to its competitive advantages. The issue, while subjective, is how far this premium can be stretched before it becomes excessive.
Historical precedent tells us that industry leaders of next-big-thing trends have a relatively short leash when it comes to extended valuations. Prior to the bursting of the dot-com bubble a quarter-century ago, prominent internet leaders like Cisco Systems, Microsoft, and Amazon peaked at price-to-sales (P/S) ratios ranging from 31 to 43, respectively. Except for Palantir Technologies, whose P/S ratio recently entered a separate orbit, no megacap company on the leading edge of a game-changing technology has been able to maintain a P/S ratio in the 30 to 40 range for a substantial length of time.
Less than a week ago, Nvidia’s trailing-12-month P/S ratio was hovering north of 30. While its P/S ratio will decline a bit when it reports projected year-over-year sales growth of 53% in the fiscal second quarter, it’ll still be tipping the scales at a multiple that’s far above anything that’s been historically sustainable.
On top of being individually pricey, Nvidia is one of a handful of high-growth tech stocks that have lifted the S&P 500‘s (^GSPC 1.52%) Shiller price-to-earnings (P/E) ratio to its third-highest multiple during a continuous bull market when back-tested 154 years. Previously documented occasions when the stock market was this expensive were eventually followed by declines of 20% or more in the benchmark S&P 500.
Pardon the pun following the gross margin discussion above, but there’s simply no margin for error.
Image source: Getty Images.
Historical precedent is an undeniable worry for Wall Street’s leading AI stocks
The final piece of the puzzle that helps explain why Nvidia is positioned to disappoint come Aug. 27 (and beyond) has to do with history.
For the better part of the last three decades, investors have been privy to no shortage of next-big-thing trends and game-changing innovations. While many of these trends went on to positively impact corporate America, including the advent of the internet, all endured early-stage bubble-bursting events.
The problem with hyped innovations is that investors consistently overshoot when it comes to widespread adoption timelines and early-stage utility. For example, businesses didn’t fully understand how to make the internet revolution work in their favor until many years after it went mainstream. It takes time for game-changing innovations to mature, which makes it unlikely that artificial intelligence has done so in a little over two years.
While demand for AI-data center infrastructure and AI software has been impressive, most businesses aren’t yet optimizing their AI solutions, nor are many generating a positive return on their AI investments. These are telltale signs that investors have, yet again, overestimated how impactful artificial intelligence will be, at least in the early going.
No megacap company’s growth has been more reliant on investor euphoria surrounding the evolution of AI than Nvidia, which has added close to $4 trillion in market cap in less than three years. Even the slightest hiccup can disrupt this hype.
To reiterate, Nvidia is a solid and time-tested company that isn’t going anywhere. But it’s far from perfect — and perfection is all Wall Street will settle for at this point.
Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Cisco Systems, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
1 of 9 | A snow-capped Mount Vesuvius looms over Naples, Italy, on January 18, 2013. On August 24, 79 A.D., thousands died and the Roman cities of Pompeii and Herculaneum were buried by the eruption of Mount Vesuvius in Italy. File Photo by Ciro Fusco/EPA
Aug. 24 (UPI) — On this date in history:
In 79 A.D., thousands died and the Roman cities of Pompeii and Herculaneum were buried by the eruption of Mount Vesuvius in Italy.
In 1814, the British captured Washington and burned the Capitol and the White House.
In 1932, Amelia Earhart became the first woman to fly non-stop across the United States.
In 1954, President Dwight Eisenhower signed the Communist Control Act outlawing the Communist Party. Though the act has never been repealed, the party exists to this day.
In 1981, Mark Chapman, who claimed devils forced him to kill John Lennon and God told him to confess, was sentenced to 20 years to life in prison for fatally shooting the former member of the Beatles.
In 1989, Pete Rose, whose slashing singles and head-first slides once made him the embodiment of America’s national sport, was banished from baseball for life, ending a gambling scandal.
In 1991, Soviet President Mikhail Gorbachev quit as general secretary of the Communist Party central committee. He also ordered his Cabinet to resign.
File Photo by Bruce Young/UPI
In 1992, Hurricane Andrew smashed into Florida south of Miami with sustained winds of 145 mph. The storm killed 15 people and caused more than $30 billion in damage.
In 1996, four women became students at The Citadel, a military school in South Carolina that had fought in court to remain all-male.
In 2004, two Russian passenger jetliners crashed within minutes of each other after taking off from Domodedovo Airport in Moscow. Authorities said terrorist attacks caused the crashes, which killed 89 people.
In 2006, Pluto, the small, distant astronomic body that has discovered in 1930, was demoted to “dwarf planet” status when the International Astronomical Union adopted a new definition of “planet.”
In 2006, the U.S. Food and Drug Administration decided to make the “morning-after” contraceptive pill known as Plan B available without a prescription to people 18 and older.
In 2011, Steve Jobs, co-founder and chief executive officer of Apple Inc., resigned, telling his company’s board he could “no longer meet my duties and expectations.” Jobs, 56, who stayed on as chairman, had battled cancer for several years. He died Oct. 5, 2011.
File Photo by Monika Graff/UPI
In 2012, Anders Behring Breivik, who killed 77 people in Norway, was sentenced to 21 years in prison, the longest prison term possible for murder and terrorism under Norwegian law.
In 2013, Bolivian government officials said inmates at a prison in Santa Cruz used knives, machetes, self-made flamethrowers and other weapons in a gang battle that left 30 people dead and dozens injured.
In 2017, a single winner from Massachusetts won $758 million for the largest single-ticket lottery jackpot win in U.S. history.
In 2022, Belgian 17-year-old Mack Rutherford became the youngest person to fly solo around the world after landing in Bulgaria, ending a 30-country, 30,000-mile trek.
In 2023, former President Donald Trump surrendered at Fulton County Jail in Georgia on a 13-count indictment for alleged efforts to overturn the results of the 2020 election in Georgia.
In 2024, French police arrested Telegram CEO Pavel Durov on a warrant accusing him of failing to take steps to curb criminal uses of the social media application, including drug trafficking, child sexual content and fraud. He was allowed to leave the country in March 2025 though the case against him was active.
Stafford, who has been sidelined since the start of training camp because of a back issue, practiced Monday for the first time.
Matthew Stafford stretches during practice at the Rams’ facility in Woodland Hills on Monday.
(Gary Klein / Los Angeles Times)
Stafford, 37, went through individual and team drills with the first-team offense. The 17th-year pro was a full participant in practice, but did not speak to reporters afterward.
“It was good to be able to have Matthew out there,” Rams coach Sean McVay said. “There are no updates. We’re going to take it a day, a week at a time. “
On Aug. 9. Stafford went through an individual workout that included throwing more than 60 passes. But he was unable to practice two days later as scheduled.
The Rams open the season on Sept. 7 against the Houston Texans at SoFi Stadium.
At USC, Stafon Johnson was a running back. As the football coach at his alma mater, Dorsey, he has continued to preach running the football — until now. He finally has a promising quarterback, sophomore Elijah McDaniel, so look for the Dons to run and pass.
“I haven’t had a quarterback in many moons,” Johnson said.
He also has his son, Deuce, playing receiver, so Dorsey will strive to be more balanced.
The Dons have a huge opening game on Aug. 28, playing Carson in a game that could have implications for the City Section Open Division playoffs weeks away.
“I really like how we’re doing,” Johnson said. “We’re still a young team. The core is 10th and 11th graders, but they played last season.”
All-City defensive back Mahki McCluster returns to lead the defense.
Perhaps Deuce has been lobbying Dad to throw more.
Whatever the reason, look for Dorsey to have the option of passing a lot more this season.
