NVIDIA Stock Is Expensive -- But for Very Good Reason
NVIDIA's (NASDAQ: NVDA) pandemic-era results have been great so far. Through the first half of the 2021 fiscal year (six months ended July 2, 2020), revenue is up 45% to $6.95 billion and adjusted net income is up 90% to $2.49 billion. However, even after reporting booming results, shares trade for a sky-high 22.9 times revenue and 63.5 times adjusted earnings per share -- valuations that assume at least a couple more years of similar double-digit growth.
NVIDIA has already laid the groundwork for years of further advance, though. We are witnessing a massive changing of the guard in the semiconductor industry, and NVIDIA is quickly emerging as the new leader in the space. It's technologically more advanced, has a nimble balance sheet, and generates lots of cash to further strengthen its leadership. The takeover and seamless integration of Mellanox in the second quarter could be just the beginning.
Much has been said about how COVID-19 is affecting enterprise-grade hardware purchasing. Faced with the crisis, many companies had to scramble to make sure they had the infrastructure needed to keep their employees productive -- leading to a temporary boost in sales for many semiconductor companies.
Source Fool.com
