Is Nvidia's Market Cap a Barrier to Further Growth?
Nvidia is currently the largest company in the world by market capitalization, worth over $5 trillion. It's also growing its revenue and net income faster than its stock price.
The company has had a rocky year, barely keeping pace with the S&P 500 in terms of growth. Both are up 17.6% over the past year, leading some to wonder if Nvidia's high-growth days are behind it.
However, massive companies can still grow further. Apple is a great example - it reached a $1 trillion valuation in 2018 and investors questioned how much higher its price could go. However, it more than doubled in size over the next two years to reach a $4.9 trillion valuation today.
Nvidia's fundamentals are also strong, with revenue growing 1,150% and net income soaring 2,250% over the last five years. Its stock is up 'just' 821%, making its current trailing price-to-earnings (P/E) ratio of 26.7 at a five-year low.