Nvidia's AI Boom Soars, but Market Concerns Linger
Nvidia's recent fiscal quarter results demonstrate the AI boom is still in full swing. The company's sales surged 106% year over year to $96.2 billion, with diluted earnings per share up by an even better 128%. The robust demand trends and ballooning capex numbers are optimistic data points, but the market is concerned about the durability of Nvidia's growth.
The forward P/E ratio of 24.2 demonstrates this concern. Based on Nvidia's financial performance, it's easy to argue that shares should command double the current valuation multiple. However, no one has any idea how long the AI boom will last.
Nvidia's success rides on the music not stopping and its ability to fend off rivals developing more advanced chips. The company expects 70% revenue growth in fiscal 2028, with a whopping $461 billion in operating income next fiscal year. This would be well ahead of anyone else.