Is It Too Late to Buy Nvidia Stock?
Shares of Nvidia (NASDAQ: NVDA) have more than tripled in 2023 -- and rightly so -- as the semiconductor giant has been delivering eye-popping growth on the back of tremendous demand for its graphics processing units (GPUs). The company's GPUs are being deployed in massive quantities to train artificial intelligence (AI) models.
However, the terrific surge in Nvidia stock means that it is now trading at an expensive valuation. The stock currently sports a price-to-sales ratio of 34, while its trailing earnings multiple sits at 109. Those figures are well above Nvidia's five-year average sales ratio of 19 and trailing earnings multiple of 74. But it isn't too late for investors to buy Nvidia stock despite its expensive valuation. Here's why.
Nvidia's revenue and earnings have shot up sharply lately. Its earnings growth has outpaced the jump in its stock price this year, which explains why the company's earnings multiple has come down significantly.
Source Fool.com
