Despite a recent sell-off, Nvidia’s shares have still surged some 4000 per cent over the past five years. It’s clearly a great business, but is it a great investment?
Already a subscriber?Every now and then, a company comes along that is so dominant and is growing so quickly that it feels like the only stock anyone cares about. I’m referring, of course, to Nvidia, the chip giant powering artificial intelligence., making it one of the three most valuable businesses in the world alongside heavyweights Microsoft and Apple.
At that rate, Nvidia’s operating earnings per share should climb to $US80 in four years from $US19 today, resulting in a long-term price/earnings ratio, let’s call it, of 18. Sorting S&P 500 companies from high to low on that measure, Nvidia’s long-term P/E ratio ranks 116 and is nearly identical to that of Microsoft and Apple. In other words, after accounting for Nvidia’s higher expected growth, it’s no more expensive than the other tech titans.
It turns out that the variability of Nvidia’s long-term growth estimates is three times that of Microsoft and four times that of Apple. So, while all three have similar long-term P/E ratios, those of Microsoft and Apple are underpinned by more modest but also more stable forecasts, whereas Nvidia’s is based on rosier projections that are harder to pin down., particularly when the outlook is hazy, as it appears to be with Nvidia.
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
One vision, 4000 artists and a country transformed: why the next British PM must copy RooseveltRoosevelt’s New Deal gave artists like Alice Neel and Lee Krasner a lifeline during a time of crisis – and it changed the face of America. Whoever wins the UK election should take heed
Read more »
NVDA: Investors trim exposure to Magnificent 7 amid rotation to ‘next phases’ of AI tradeHedge funds have trimmed exposure to the Magnificent Seven and increased holdings in the utilities and healthcare stocks as the AI rally broadens to other pockets of the sharemarket
Read more »
4000-year-old Greek hilltop site mystifies archaeologists. It could spell trouble for new airportFor the time being, experts speculate the site could have been used for a ritual or religious function.
Read more »
Why this wild ride is the most fun you can have with your clothes onThey’ve covered nearly 4000 kilometres in eight days across dirt roads driving old bombs, raising funds for the Royal Flying Doctor Service.
Read more »
Crackdown on dangerous ‘date rape’ drugMore than 4000 litres of the drug have been seized recently as police warn about a rising number of sexual assaults and overdoses linked to it.
Read more »
Crackdown on dangerous ‘date rape’ drugMore than 4000 litres of the drug have been seized recently as police warn about a rising number of sexual assaults and overdoses linked to it.
Read more »