Dump NVIDIA, Buy This Hot Gaming Stock Instead

There's no doubt that NVIDIA (NASDAQ: NVDA) has been a top growth stock in 2020. It has sent investors laughing all the way to the bank on the back of a rapid increase in demand for its graphics cards that are used in video gaming, data centers, and other products.

The sharp rise in NVIDIA's revenue and earnings has helped the stock more than double this year. The downside to that rapid appreciation is that NVIDIA stock is now richly valued, with a price-to-earnings (P/E) ratio of 85, double the company's five-year average of 47. It also trades at 22 times sales, way higher than the five-year average price-to-sales multiple of 12.2.

There are also concerns about the pace of NVIDIA's data center growth that may give investors second thoughts on whether this high-flying tech stock is still worth holding on to.

Source Fool.com