Nvidia Stock Won't Be Overvalued by 2028: My Case for Buying NVDA Today
Yahoo Finance ·
Nvidia ( NVDA -2.34% ) has jumped 15% since July 29, but it's not overvalued. It's true that the stock is more expensive than the S&P 500 , trading at a trailing price-to-earnings ratio of 37.5 based on adjusted earnings per share, but investors have to consider the company's growth rate as well. Factoring that in, Nvidia is on fire. The company reported 85% revenue growth in the first quarter, and revenue growth is expected to accelerate to 97% in the second quarter as it launches its new Rubin platform. A price-to-earnings ratio tells you a company's valuation, but it's not that useful on its own. You have to consider a company's growth rate as well, and the metric that does that is the PEG ratio , which is the price-to-earnings-to-growth ratio, or the PE ratio divided by its expected compound annual earnings-per-share growth over a given period, often the next five years.
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