Should I buy Nvidia now? Bloomberg: “There is ample room for upside”

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NVIDIA daily stock price trend – captured by Yahoo Finance

Due to strong performance, Nvidia is rewriting the history of Wall Street, with its stock soaring by more than 16% and its market capitalization approaching $2 trillion.

On the New York Stock Exchange on the 22nd (local time), Nvidia recorded $785.38, up 16.40% from the previous trading day.

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The stock price is approaching $800. As a result, the stock price has risen so much that it is burdensome to enter now.

In this situation, Bloomberg News of the United States assessed that Nvidia’s stock price is still relatively cheap despite the recent surge. This means that profits are growing faster than the stock price is rising, so there is ample room for further upside.

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“Some investors hesitated to buy NVIDIA stock because they thought it was too expensive, but in the end, that was a big mistake,” said James Demmert, chief investment officer at asset management company Main Street Research.

He added, “Every time an earnings announcement is made, the net profit is much stronger than expected, so the price-to-earnings ratio (PER) continues to fall,” adding, “There appears to be ample room for additional upside.”

PER is the stock price divided by earnings per share, and is usually considered to be around 20.

Currently, NVIDIA’s 12-month forward PER based on expected net profit in 2024 is around 33. This is lower than 45 a year ago.

This means that although earnings per share last quarter surged 769% compared to the previous year, the stock price did not rise that much.

Above all, PER 33 is lower than that of competitors. AMD is at 49, Microsoft (MS) is at 35, and Amazon is at 41. Even the outdated Tesla is 45.

Although Nvidia’s stock price has risen significantly, Bloomberg analyzed that since Nvidia controls 80% of the AI ​​chip market, its net profit is growing faster than its stock price is rising, so it seems not too late to enter now.

Source: Donga

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