Pro: Data centers and artificial intelligence. Of course, trailing P-E is not the only metric to value a company, but such divergence from the market should raise an eyebrow. In fact, among companies with market capitalization greater than $200 billion, only Tesla Inc. ( AAPL) have P-E ratios of 10, 45 and 26, respectively. Nvidia has a price-earnings ratio of more than 100 times the previous year’s earnings, far eclipsing the Nasdaq average valuation of about 30 times. Such runaway success raises the question of whether Nvidia’s stock price truly aligns with its fundamentals. In January 2020, NVDA traded around $60 per share, and today, the stock trades near $300 per share. Unlike many stocks, Nvidia’s shares did not take a hit during the coronavirus pandemic. “NVDA remains our best large-cap growth idea,” says Truist analyst William Stein.Ĭon: High share price and lofty valuation. In the future, expect this segment to drive growth as the company heads full throttle into supporting AI and virtual reality. In 2021, compute and networking revenue grew a whopping 109% year over year, knocking graphics’ share of total revenue down from 70% to 59%.

Nvidia’s two major revenue segments are graphics - primarily its signature GPU chips for computers and gaming - and compute and networking - its technology for data centers, autonomous vehicles and AI. Along the way, net income soared from $631 million to $4.3 billion. Revenue from fiscal year 2021, which ended in January, topped $16.7 billion, up 52.7% from 2020 and up 263% from 2015. Pro: Consistent growth and increasing profitability.Įxcluding 2020, Nvidia has experienced positive revenue growth every year since 2015. Here are three pros and three cons of investing in NVDA to keep in mind. With such a run, investors might be wondering whether to come along for the ride or avoid the hype. In the past month, NVDA stock has soared more than 40%, as the company appears uniquely positioned to contribute to this uncharted technological future. Recently, eyes have been on the company as it attempts to power the future of technology - the metaverse, virtual reality, artificial intelligence and data centers. Today, Nvidia’s graphics processing units, or GPUs, power and create the displays on the world’s most iconic devices.

In the early 2000s, it struck key deals to place its chips in Xboxes and PlayStations. Founded in 1993, Nvidia went public in 1999. (ticker: NVDA) designs and manufactures computer graphics processors and related computing technology. Business & Finance Click to expand menu.

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