Thinking of Buying Nvidia Stock? Here's 1 Reason Why You Shouldn't Delay
Shares of Nvidia (NASDAQ: NVDA) have more than tripled in 2023, racking up gains of 222% this year, which explains why the stock is trading at a ridiculously expensive valuation right now that might make investors wonder whether buying this high-flying semiconductor name makes sense anymore.
After all, Nvidia now commands a price-to-earnings (P/E) ratio of almost 240. That's significantly higher than the S&P 500's P/E ratio of 20 and Nvidia's five-year average trailing earnings multiple of 70. The only way Nvidia can justify such a rich valuation is by consistently outperforming Wall Street's expectations and delivering eye-popping growth.
The good part is that Nvidia's guidance for the current quarter and a look at its end markets suggest that it could deliver on those fronts. The chipmaker anticipates a 64% year-over-year jump in revenue in the ongoing quarter to $64 billion, driven mainly by artificial intelligence (AI)-fueled demand for its data center graphics processing units (GPUs).
Source Fool.com
