Nvidia (NASDAQ: NVDA) share prices reached an all-time (split-adjusted) high of $346 in November after reporting another blockbuster quarter of earnings. But the expectation that the Federal Reserve will raise benchmark interest rates several times in 2022 has put some downward pressure on the high valuations of many growth and tech stocks.
Even after Nvidia's 36% share price trim, it still trades at a lofty price-to-earnings ratio of 70. But regardless of where interest rates go in the near term, Nvidia's valuation can be justified by the robust demand it is experiencing. In its fiscal 2022 third quarter (which ended Oct. 31), the graphics processing unit (GPU) specialist reported adjusted earnings growth of 60% year over year, driven by gains across its data center and gaming segments.
Image source: Getty Images.
Source Fool.com