Is Nvidia Stock Still a Buy After Increasing 90% Since October?
Amid a nasty down cycle for the semiconductor industry, Nvidia (NASDAQ: NVDA) has rallied some 90% off lows from mid-October 2022. That's confounding, given that fellow semiconductor design peers have said that chip market growth may not make a comeback until this summer, and geopolitical tensions are heating up, with the U.S. banning exports of advanced chip technology (an Nvidia specialty) to China.
As of this writing, Nvidia stock trades for over 94 times trailing-12-month earnings and 44 times one-year forward expected earnings. Whether it's still a bear market or a new bull market has already begun (led by the semiconductor space), that kind of valuation is tough to stomach. But even more interesting is why the market suddenly has an appetite for risk again. What's going on with Nvidia, and is it really a good buy right now?
Before discussing the reason Nvidia has rocked the market's early 2023 rally, let's go back in time just a few years to 2018, another rough year for the semiconductor market. There were the U.S. Federal Reserve's rate hikes (albeit nowhere close to as aggressive as those of 2022) and a downturn in chip demand, exacerbated by the U.S.-China trade war. The market overall didn't do particularly well. Nvidia stock got hit hard, but then started 2019 off hot.
Source Fool.com
