Artificial intelligence (AI) quickly transforms the world economy. The ability of the technology to automate complex workflows and provide predictive insight into a new era of business efficiency and at the same time strengthening human creativity. Perhaps no other company has played a greater role in the AI revolution than Nvidia (Nasdaq: NVDA). The accelerated computing GPUs of the chip giant are now recognized as the backbone of the AI infrastructure, so that the most innovative applications are performed.
Because of that success, shareholders have been gropably rewarded, with Nvidia shares in the past five years yielding no less than 1,604%. Some investors who see those performance can assume that the share is now too expensive or overvalued. That is what risks with the prospect of the big whole think, that is Nvidia’s enormous growth and winning momentum.
Given that fundamental ridge, Nvidia shares can still be attractively priced. This is why.
The latest financial trends from Nvidia were excellent. Before the tax year ending on January 26, the turnover year after year increased by 114%, causing the adjusted profit per share (EPS) to $ 2.99 threatened, with an even stronger 130% compared to last year. Wall Street analysts followed by Yahoo! Finance expects the sizzling pace to continue and this year another 56% revenue growth projects with an EPS target of $ 4.50 in tax 2026.
The result is that NVIDIA shares now act at a forward price-gain ratio of 26, well below the five-year average above 70 for the company’s profit. Because of this measure, Nvidia shares appears downright cheap, especially without signs that the demand for its AI chips slows down.
NVDA PE -Ratio (forward) data by Ycharts
There is no data point or valuation statistics that only determines whether a stock is cheap or expensive. The good news is that Nvidia is well positioned to maintain its AI dominance in a secular growth story that is not nearly over. With AI acceptance that accelerates worldwide, Nvidia remains a best-in-class shares for exposure to technical sector.
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