Shulou(Shulou.com)11/24 Report--

According to news in the morning of May 31, Beijing time, it is reported that recently, the share price of American semiconductor giant Nvidia has soared. However, Nvidia's capital valuation has actually fallen, according to an indicator often used by Wall Street analysts and investors.

Nvidia's shares have soared 31% in the last three trading days, including a 3% increase on Tuesday, which closed at $401.11. At one point, Nvidia's market capitalization broke through the $1 trillion mark in trading on Tuesday.

A common Wall Street indicator of valuations of listed companies is the "forward price-to-earnings ratio", the ratio of share prices to projected earnings over the next 12 months. Nvidia currently trades at 45 times forward earnings. By contrast, Nvidia had a forward price-to-earnings ratio of 62 times on May 18.

Although US stock investors have been on a buying spree in recent days, the forward price-to-earnings ratio has strangely fallen, mainly because Wall Street analysts have raised their expectations for Nvidia's future earnings faster than the share price.

According to statistics, for Nvidia's second quarter, Wall Street analysts forecast an average profit per share of $2.05, while for full-year earnings, analysts raised their forecasts by an average of 71% to $7.75 per share. Analysts have raised their share price targets by an average of 95%.

At the time of the results, Nvidia predicted that revenue for the current quarter was half higher than analysts' forecasts. Huang Renxun, the company's chief executive, said Nvidia was massively increasing production capacity to meet rapidly rising customer demand in terms of chips used in data centers.

At the end of April, analysts raised the median price target for Nvidia to $450 at the end of April, according to Refinitiv, a financial data firm, but there is still some disagreement over whether the stock will "live up to expectations" in the future.

Stasi Stacy Rasgon, an analyst at Bear Stearns Research, said that for Nvidia's share price, investors are still waiting to see whether this year's strong trend marks the opening of a new upward channel.

Mr Lasger said Nvidia had a very high earnings ratio before the earnings report, suggesting that Wall Street analysts' forecasts for future earnings were too conservative and that it was worth watching whether the "conservative forecasts" would happen again.

Suzanne Street, a US financial executive, said investors were delighted by the sudden surge in Nvidia's sales, but they also needed to focus on some headwinds, such as pressures in the upstream supply chain and fluctuations in product prices.

Street said that Nvidia has taken a strong position in the first row of the new wave of artificial intelligence, and the company's business growth does not look like a flash in the pan, but this rapid growth will also pose some challenges.

In Tuesday's trading, Nvidia also became the first semiconductor company in the world to break the $1 trillion mark, closing the day at $991 billion. Nvidia's valuation is significantly higher than that of other semiconductor rivals, such as computer processor maker AMD, which currently trades at 38 times forward earnings.

In addition, among the s & p 500s, Nvidia also had the biggest gain so far this year, up 175%, while the s & p 500 index rose only 10%, trailing only Nvidia, followed by social media giant Meta, up 119%.

In the latest round of earnings season, "artificial intelligence" has become a hot keyword. According to media statistics, the word "artificial intelligence" was mentioned about 900 times in the conference call of financial analysts of S & P 500 companies.

It is reported that in the Nvidia analyst meeting, "artificial intelligence" was mentioned 86 times, more than Google's parent company Alphabet meeting mentioned 52 times, and Microsoft's 35 times.

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