Nvidia (NVDA) stock has become a Wall Street darling again, but with that love comes a whole lot of expectation.
Shares of the chip giant have exploded 115% year to date, dusting the Nasdaq Composite’s seemingly paltry 20% gain. The company’s stock is leading the pack among well-known chip-makers: AMD (AMD) shares are up 63% on the year, Intel (INTC) has advanced 14%, and Qualcomm (QCOM) shares have actually lost 3.6%.
The stock has even outperformed mighty Apple’s (AAPL) 35% appreciation.
“Nvidia is trading on heroic valuations which time will tell if they are justified,” quipped Deutsche Bank strategist Jim Reid in a client note Monday.
To Reid’s point, Nvidia’s valuation clearly puts the stock in priced-for-perfection territory.
The stock trades on a forward price-to-earnings multiple of 63 times, according to Yahoo Finance data. By comparison, the S&P 500 trades on a forward price-to-earnings multiple of 18.8 times.
In effect, investors are banking on Nvidia to grow its future…
This article was written by and originally published on finance.yahoo.com