Richly-Valued Chip Giant Nvidia Has No Room for an Earnings Slip-Up
- Stock trades at 49x forward profits even after recent selloff
- Analysts bullish on earnings, but concerned about valuation
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With major earnings letdowns from Netflix Inc. and PayPal Holdings Inc. still fresh in the memory, the bar is high for Nvidia Corp. given that the chipmaker’s valuation far exceeds most U.S. benchmarks and its rivals.
Even after being caught up in the selloff that’s pummeled fast-growing technology stocks, Nvidia trades at about 49 times projected profit and is 2-1/2 times more expensive than the Philadelphia semiconductor index average, according to Bloomberg data.