NVIDIA Shares Can Cross the $1,000 Price Mark if the Stock Matches Its Dot-Com Bubble Peak Valuation

wccftech.com:

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

NVIDIA shares are lower today as atrocious Chinese PMI data, coupled with the continuing overhang from the debt limit saga, hammer US equities. However, there is no end in sight to NVIDIA’s AI-fueled bull run, and the stock can eclipse its dot-com bubble peak valuation before everything is said and done.

NVIDIA expects to earn around $11 billion in revenue in the ongoing quarter, corresponding to a 55 percent upside relative to the street consensus just a few weeks back. According to JP Morgan, the chipmaker would remain the primary beneficiary of AI-related spending this year, scooping up as much as 60 percent of the proverbial pie.

Meanwhile, in order to cash in on the hype around AI, NVIDIA continues to launch new products. At the Computex 2023, the GPU maker announced the GH200 Grace Hopper Superchip. The chip combines the Grace CPU and Hopper GPU architecture for “giant-scale AI and HPC” applications by delivering computing power of 1 exaflop.

While its current valuation of 200x earnings (0.5% earnings yield) may seem expensive at first blush, $NVDA is trading at a significant discount to its 2000 peak valuation of 1,000x earnings (0.1% earnings yield)

So there's that pic.twitter.com/S535ctScI3

— Julian Klymochko (@JulianKlymochko) May 31, 2023

This brings us to the crux of the matter. As explained in the above tweet, NVIDIA is currently trading at a Price-to-Earnings (P/E) ratio of 200x on a Trailing Twelve Months (TTM) basis. More specifically, the stock is trading at a P/E multiple of 207x, based on a TTM EPS of $1.92 and the current stock price of $397.48. However, during the peak