AI Monster Has a Lot to Live Up To
The Bear Case
There is no question that NVDA is a killer company with a monster product line. But let's not forget that there is a difference between a good product and a good investment. Valuations matter, and this company is still trading at extreme multiples of the typical metrics - P/E, P/B, P/S.
Even though they've crushed earnings estimates the last two quarters, the stock has responded negatively in both cases, or at least not positively. A failure to react as expected is often a sign of exhaustion and can be seen on the chart with the inability to stay above the $500 level, which may favor a short to medium-term bearish position.
The Bull Case
This is a tricky one though - some analyst estimates put valuations on this bad boy at as high as $1,100/share, which would represent a market capitalization of $2.7 Trillion.
Even with the extremes in the common valuation multiples mentioned above, growth has to be accounted for, and the stock's PEG (Price-to-Earnings-Growth) Ratio is actually at a level that has marked some historical lows in the past.
In the wise words of Elon Musk "Place your bets accordingly".
There is no question that NVDA is a killer company with a monster product line. But let's not forget that there is a difference between a good product and a good investment. Valuations matter, and this company is still trading at extreme multiples of the typical metrics - P/E, P/B, P/S.
Even though they've crushed earnings estimates the last two quarters, the stock has responded negatively in both cases, or at least not positively. A failure to react as expected is often a sign of exhaustion and can be seen on the chart with the inability to stay above the $500 level, which may favor a short to medium-term bearish position.
The Bull Case
This is a tricky one though - some analyst estimates put valuations on this bad boy at as high as $1,100/share, which would represent a market capitalization of $2.7 Trillion.
Even with the extremes in the common valuation multiples mentioned above, growth has to be accounted for, and the stock's PEG (Price-to-Earnings-Growth) Ratio is actually at a level that has marked some historical lows in the past.
In the wise words of Elon Musk "Place your bets accordingly".
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