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

Every time Nvidia reports its results for the new quarter, investors' concerns about its overvaluation are alleviated-as the guidance for the next quarter will far exceed analysts' expectations.

This time is no exception. In the early hours of this morning, after giving eye-popping guidance for the next quarter, Nvidia's forward price-to-earnings ratio fell to about 40 times earnings, down from 63 times in May. Low price-to-earnings ratio means that share prices are undervalued and have more room to rise.

Michael Kirkbride, portfolio manager at Evercore Wealth Management, said: "people have always questioned whether Nvidia can grow to its valuation level, and now it seems that there is a good chance of achieving that goal. Given the current extraordinary growth rate, its share price is not very high."

Bulls have been defending Nvidia's high valuations for nearly a year, arguing that Nvidia's actual profits are higher than current expectations, making their share price ratios look low. Today, Nvidia's strong performance confirms this.

When it comes to growth, no other tech giant is expected to match Nvidia. Of course, Nvidia's share price is not low. Its price-to-earnings ratio is still higher than that of companies such as Apple, Microsoft and Meta. Currently, the Nasdaq 100 index trades at about 24 times forward earnings.

After a blowout growth in May, Nvidia has become the first semiconductor company in history to have a market capitalization of $1 trillion. Since then, investors have been looking for evidence that it will maintain strong growth in the second quarter.

Nvidia's revenue for the quarter was $13.51 billion, up 88% from the previous quarter and 101% from a year earlier.

Even Tesla's second-quarter revenue growth was less than half that of Nvidia, and in sharp contrast to Nvidia, Tesla's profits are expected to decline this year.

In addition, the current artificial intelligence boom has only just begun. Analysts generally believe that Nvidia can maintain its growth momentum and reach its valuation level.

Today, Nvidia also announced that it would buy back an additional $25 billion of shares, giving bulls another reason to cheer.

"it makes Nvidia different from a startup," says Quincy Krosby, chief global strategist at LPL Financial. "it's a mature company and you need to see that in this period of business development."

Nvidia's revenue more than doubled in the second quarter, thanks to strong demand for its artificial intelligence processors. So far, Nvidia is growing the fastest in the Nasdaq 100 index. Electric carmakers Lucid and Tesla ranked second and third respectively, but their revenue growth was only half that of Nvidia.

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