Nvidia Stock Price Jumps Higher

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Nvidia Stock Price Jumps Higher

Nvidia Has Gained 2081% In Last 5 Years

Nvidia (NVDA) has gained an astonishing 2018% in the last 5 years. Such impressive gains are not something that one normally sees in a blue-chip stock that's as big as Nvidia.

As of now, the market cap of Nvidia (NVDA) is now sitting at $3.3 trillion with a P/E of 54. If we look around, Amazon has a P/E of 47 which is still slightly below the Nvidia.

Nvidia P/E Ratio Is Too High

However, the P/E of Nvidia may be too much for some investors who want to play it safe. But we also need to remember that Nvidia is a blue-chip stock and not a penny stock. During the same time, Amazon has gained around 135% which is nowhere near the 2018% of Nvidia.

Amidst all of this, some experts believe it's not wise to buy Nvidia stock at the current levels. Besides its higher price, the P/E ratio of the Nvidia is also too high for many investors.

During the same period, the earnings of Nvidia have also increased immensely during the same period. Had the earnings not increased while the stock price kept rising, the P/E ratio would be 100+.

Looking ahead, the demand for AI chips may decline in the coming years. After all, many companies have already stocked up on AI chips and have already gone through their first installation rounds.

Meanwhile, Nvidia also faces competitive pressure as other chip makers can offer better pricing. So, that's also something that can impact Nvidia's bottom line.

There's no doubt that Nvidia has the potential to rise even from its historic highs. It is based on the company's customer base, tech, and ambition.

However, its current P/E ratio and the stock price are just too much for an average investor. But if someone has the stomach for high volatility and is all right with buying at the current P/E, there are also many opportunities.

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