After huge gains over the past two months, the NvidiaThe stock closed Thursday with a market capitalization of $1.72 trillion, second only to Amazon's $1.76 trillion, and poised to overtake the latter as the fourth-largest U.S. company.listed company.
So far this year, NVIDIA's stock price has surged more than 40%, reflecting theArtificial Intelligence ChipDemand is strong. But such a rapid rise has also fueled investor concerns about the sustainability of the stock's price.
Michael Cuggino, President of Permanent Portfolio Family of Funds, said that they have chosen to reduce some of their holdings in NVIDIA stock in light of the strong run-up in NVIDIA's stock price. He believes that NVIDIA is currently overvalued, despite its positive outlook.
NVIDIA is currently trading at 33x P/E, up sharply from 25x at the start of the year, and close to what it has been trading at in recent months.HighestLevel. As the performance of the Nasdaq 100 Index this yearoptimalNVIDIA's shares have also risen far more than any other tech stock in the 'Big Seven'. Its strong sales and profit growth was largely driven by AI Related needs.
Analysts have also continued to raise their earnings per share estimates for NVIDIA's fiscal year 2024, but they have yet to keep pace with the stock's surge. NVIDIA's market capitalization has increased by $600 billion in the past three months.
Compared to other tech giants, NVIDIA's valuation isn't overly high. However, given its recent surge, further gains may be difficult to come by. The stock has already broken above its average price target, approaching its highest level since May.HighestThis is a point, which means that the space is limited. Technical indicators also suggest that the stock may be overheated.
But both the bulls and the shorts are noticing that NVIDIA's earnings are still strong enough to support a rising stock price. Arm Holdings, for example, expects AI to be a long-term growth driver.
Macquarie Asset Management'sadvancedPortfolio Manager Zinn believes that NVIDIA's stock is poised to continue its rally, given that its valuation is still well below its all-time highs. He believes NVIDIA's growth in AI is much higher than other companies, and that the stock price has kept pace with higher expectations. As long as this trend continues, the stock is expected to continue to climb.