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Nvidia Stock soars after A.I frenzy hits the market!

The chipmaker’s shares have almost doubled from their October low, closing Thursday at $223.37

The market frenzy around artificial intelligence has lifted Nvidia Corp.’s stock so much that even many bullish analysts don’t see it going much further.

Tweet of Nvidia stocks fluctuation

The company is valued at 51 times projected earnings, much higher than its average multiple of 30 over the past decade.

“Nvidia is trading rich from a valuation perspective,” said Greg Bassuk, chief executive officer at AXS Investments in New York. “There is room for some multiple compression in the weeks and months ahead.”

While Nvidia has built a multibillion-dollar server business in the last few years, it still depends heavily on the market for personal computers, where gamers use its cards to get the most realistic experience.

  • The excitement surrounding AI was sparked by the massive popularity of OpenAI’s ChatGPT tool.
  • Expectations now may be too high, as the price target and earnings multiple show.

Earnings reports from Intel Corp. and Advanced Micro Devices Inc. showed that demand in those markets has collapsed amid an excess of inventory, and the companies indicated that orders won’t improve until the second half of this year.

Nvidia reports on Feb. 22, and analysts have been getting more pessimistic, cutting their estimates for fourth-quarter adjusted earnings per share by 26% over the past six months and reducing their revenue outlook by 22%.