We all know the current demand for GPUs courtesy the ongoing boom in cryptocurrencies. This boom diverted people’s attention to another aspect of earning money; through crypto mining, which requires high processing power usually through GPUs. Even with the demand for GPUs increasing, indirectly causing a surge in price, the major GPU manufacturer, Nvidia’s stock is still as the cheapest it has ever got within a year or so.
Nvidia in itself is rather a popular company, known for their GPUs which are the most important for gamers. Therefore, they are quite popular in the Wall Street Market as well. Not only does Nvidia manufacture graphics cards, but they also have their investments in other areas of the industry too. These investments range from the self-driving cars to artificial intelligence as well as machine learning. Since these three are easily regarded as technologies of the future, it is safe to say that Nvidia would still be one of the industry leaders in the years to come.
Courtesy their diversification and creating new products on a regular basis due to being highly innovative, company’s stock has grown over the years tremendously. This can also be partially attributed to the great leadership which the company has. The results proved so fruitful that Nvidia’s stock skyrocketed more than 800 percent of their value a couple of years ago.
These are not the only reasons for the explosive stock growth rate. Rapid earnings and revenue expansion have also played a great role in getting their Earnings Per Share (EPS) grow by 61 percent while the sales growth rate also has seen a substantial increase by 41 percent and all in just one calendar year.
It is speculated that Nvidia’s stock would only continue to grow so it is certainly the cheapest you can get now. Even now the tech-giant has a P/E ratio of 38.2 as compared to the industry standard of 15.8, that’s even more than twice.
According to Yahoo Finance, “One thing that nearly everyone can agree on is that Nvidia is quite the unique company. Prudent investors are correct to compare the stock to the others around it, but the uniqueness of the situation might also demand special consideration. In other words, investors looking to determine whether Nvidia is “cheap” or “expensive” might be best served by comparing the stock to itself.”
Though yes, there are concerns too by some people that this can just be another bubble of the market, but it doesn’t seem like so. This is because with companies as big as Nvidia, investors usually trust them more like others, so they do have to pay a bit extra to get their stock as well. This is because only companies with large resources actually have a chance of getting a breakthrough which can change the world.
You can see the Nvidia’s historical Forward P/E below and it is quite evident that the stock is clearly rather undervalued for now, and is as cheap as you can get. If are skeptical of it getting low, then this was major because of the late-January sell-off, but now that things are getting stable, the shares are expected to get to get back to normal too. It might also be the fact that people were estimating rather rising earnings, so P/E got lower.
That said, now is the right time to invest in Nvidia if you were thinking about doing so since its stock prices are going to get up high again soon.