Is Nvidia Stock Overpriced?
Nvidia stock has more than doubled since the beginning of the year. This would lead most investors to wonder if the stock has reached its pinnacle, with nowhere to go but down.
One way to determine the value of a stock is to compare its price-earnings ratio to competitors. This ratio compares the price of the stock to the company’s earnings and indicates how much an investor “pays” for a dollar of earnings by buying the stock. A lower P/E ratio means the stock is more of a “bargain” than one with a higher P/E ratio.
Looking at the P/E ratios of other mega-cap tech companies will provide some insight into whether Nvidia is overvalued. As of Nov. 28, Microsoft’s (MSFT) P/E ratio was 36.98. Apple’s (APPL) P/E ratio was 31.13. Alphabet (GOOGL) had a P/E ratio of 26.18. The P/E ratio of Nvidia on Nov. 28 was 63.50.
Looking at more direct competitors, AMD (AMD) had a P/E ratio of 1,112.09 on Nov. 28. Taiwan Semiconductor Manufacturing (TSM) had a P/E ratio of 18.45.
Based on this metric, it’s easy to see that Nvidia stock is cheap compared to AMD but high compared to Taiwan Semiconductor Manufacturing and the major tech stocks. This would indicate that a great deal of the company’s future potential is already baked into the stock price. $NVIDIA(NVDA.US$ $Microsoft(MSFT.US$ $Apple(AAPL.US$ $Advanced Micro Devices(AMD.US$
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XFOMO : AMD are amortizing the cost of Xilinx acquisition , the estimate PE is 4x
非农数据 XFOMO: AMD has taken off