Nvidia's Surging Growth Defies Valuation Fears
A veteran financial writer shares their regret for not investing in Nvidia (NASDAQ: NVDA) when they first started covering it nine years ago. The company has experienced a nearly 5,230% gain over that period.
Despite its growth, the stock trades at a P/E ratio of 33, which some may consider high. However, the writer argues that this valuation is not excessive given the company's revenue growth.
Nvidia's financials are strong, with revenue increasing by 85% to nearly $82 billion in the first quarter of fiscal 2027 and net income growing 211%. The company also has over $80 billion in liquidity and spent only $6.6 billion on capital expenditures (capex) over the last year.
The writer notes that some investors may be concerned about the law of large numbers slowing down Nvidia's growth, as well as the sustainability of the AI building boom. Additionally, there is a risk of circular financing, where Nvidia funds customer purchases to sustain its own growth.