Nvidia Stock Is Expensive, But This AI Stock Could Become a Screaming Bargain in June
The surge in artificial intelligence (AI) applications has had a major impact on Nvidia (NASDAQ: NVDA), pulling the chipmaker out of the rut it was in and helping it deliver terrific guidance for the current quarter that points toward outstanding year-over-year growth in its revenue and earnings.
More specifically, for its fiscal 2024 second quarter (which began on May 1), Nvidia forecasts a 64% year-over-year increase in revenue to $11 billion at the midpoint of its guidance range. Analysts are expecting the company's earnings to jump to $2.05 per share from $0.51 per share in the prior-year period, which isn't surprising given the immense pricing power that Nvidia enjoys in AI chips.
However, investors looking to buy into Nvidia's AI-driven growth at this point will have to pay a massive premium. The stock trades at 201 times earnings right now. Its forward price-to-earnings (P/E) ratio of 52 points toward the terrific bottom-line growth the company expects, and which it could indeed deliver. Even then, though, it is quite expensive considering that the tech-heavy Nasdaq-100 index sports a forward P/E ratio of 27.
Source Fool.com
