nvidia (NVDA) 2.63%)) Stock has recently lost steam. When they entered the trading on Tuesday, the stocks of the popular chipmaker were in negative territory that year, at just under 1%. Earlier this year, the slowdown is noteworthy for stocks that generated 171% profit in 2024.
This continues to be one of the most valuable companies in the world with a market capitalization of around $3.3 trillion, but despite its high ratings, Nvidia could still be a great purchase. there is. And based on one metric, it could even be a steal of a deal now.
Nvidia’s price/revenue to growth ratio is less than 1
The multiples that investors often use to value stocks is the ratio of price to revenue (P/E). This shows how expensive each share is in relation to profitability. However, multiples of P/E can vary based on how much your business is growing and the sector in which it resides. Nvidia’s P/E multiple is above 50, which is likely high, but if you’re expecting a lot, it can be justified. Growth from the future business.
This is where multiples like price/revenue to growth ratio, or PEG, are useful. It is a factor in analysts’ expectations for future growth. If the PEG ratio is below about 1, it’s a great purchase based on the growth that is generally expected. According to Yahoo! data, Nvidia’s PEG ratio is currently at 0.96 based on expected growth rate over the next five years, which means that it is a transaction taking into account the current outlook from analysts. It suggests.
Does this mean that Nvidia’s shares are scheduled for a large gathering?
Based on the multiples of low pegs, it may be appealing to think that Nvidia still has more advantages. And that may be the case in the long run. However, PEG ratios depend on analyst estimates and can change over time. Change can soon occur, especially amid growing questions about whether tech companies are investing too much in artificial intelligence (AI).
Investors appear to be concerned about high-tech spending with the advent of the Deepseek AI model. And if that’s the case, investors may wonder whether all these NVIDIA chips are really needed for AI development.
Nvidia’s massive growth in recent years has been an important reason why investors remain bullish. Also, if a slowdown occurs, it can have a very large impact on inventory and potentially lead to divestitures. Investors will get a better idea of how strong demand is when Nvidia reports revenue later this month. It could ultimately determine how hot stock purchases will be in the coming weeks.
Is it a good time to buy Nvidia stocks?
Nvidia is one of the leaders of Tech and is a solid investment to buy and hold. In the next 12 months, it generated more than $63 billion in revenue with $113 billion in revenue. These are great margins and give the company enough flexibility to lower prices or use those profits to invest in new growth opportunities.
And even if it slows down in technology spending, stock prices could be in excellent shape over the long term, as companies have the financial strength to adapt to changing market conditions.
There may be volatility next year or two if AI hype is cooled, especially as Nvidia’s stock is synonymous with AI-related developments. However, unless you’ve worked hard for a few years and are willing to potentially embark on short-term volatility, it may not be too late to invest in this top tech stock.
David Jagielski has no position in any of the stocks mentioned. Motley Fool has a job at Nvidia and recommends. Motley Fools have a disclosure policy.
