Forbes on Nostr: Is Nvidia Stock In A Bubble Or Justified By AI Growth? ========== Nvidia shares ...
Is Nvidia Stock In A Bubble Or Justified By AI Growth?
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Nvidia shares dropped nearly 7% in two days late last week, sparking concerns that the meteoric rise of the AI market leader's stock price may have peaked. Nvidia briefly surpassed Microsoft and Apple mid-week to become the world's most valuable company but slipped back to third place by Friday's close. Nvidia shares are still up 156% year-to-date. Several concerns are causing investors to reevaluate their faith in the rally, including the overall economy losing momentum, the extreme domination of large-cap technology stocks, and the significant outperformance of AI-related stocks. Nvidia's financial results for the first quarter of fiscal 2025 showed revenue growth of 262% compared to a year ago. Nvidia has an estimated market share of 80% in specialized chips needed for most AI applications. From a valuation perspective, Nvidia is not cheap, with a one-year forward price-to-earnings ratio of 47x. However, during the peak of the dot-com bubble in 2000, Nasdaq 100 stocks traded at an absurd trailing P/E of 200. The options market does not indicate extreme bullishness in Nvidia. Public company mentions of AI in earnings calls are at a record high, with 40% of S&P 500 discussing AI on their earnings calls. AI is predicted to contribute 14%, or $15.7 trillion, to the global economy by 2030. Nvidia does not appear to be in the late stages of a bubble, but it must continue surpassing expectations and maintaining its market leadership to justify its current price.
#Nvidia #Ai #StockMarket #Valuation #TechnologyStocks
https://www.forbes.com/sites/garthfriesen/2024/06/23/is-nvidia-stock-in-a-bubble-or-justified-by-ai-growth/
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Nvidia shares dropped nearly 7% in two days late last week, sparking concerns that the meteoric rise of the AI market leader's stock price may have peaked. Nvidia briefly surpassed Microsoft and Apple mid-week to become the world's most valuable company but slipped back to third place by Friday's close. Nvidia shares are still up 156% year-to-date. Several concerns are causing investors to reevaluate their faith in the rally, including the overall economy losing momentum, the extreme domination of large-cap technology stocks, and the significant outperformance of AI-related stocks. Nvidia's financial results for the first quarter of fiscal 2025 showed revenue growth of 262% compared to a year ago. Nvidia has an estimated market share of 80% in specialized chips needed for most AI applications. From a valuation perspective, Nvidia is not cheap, with a one-year forward price-to-earnings ratio of 47x. However, during the peak of the dot-com bubble in 2000, Nasdaq 100 stocks traded at an absurd trailing P/E of 200. The options market does not indicate extreme bullishness in Nvidia. Public company mentions of AI in earnings calls are at a record high, with 40% of S&P 500 discussing AI on their earnings calls. AI is predicted to contribute 14%, or $15.7 trillion, to the global economy by 2030. Nvidia does not appear to be in the late stages of a bubble, but it must continue surpassing expectations and maintaining its market leadership to justify its current price.
#Nvidia #Ai #StockMarket #Valuation #TechnologyStocks
https://www.forbes.com/sites/garthfriesen/2024/06/23/is-nvidia-stock-in-a-bubble-or-justified-by-ai-growth/