Nvidia's expected P/E ratio (P/E) converged to 18.7 times at the end of March. Looking back at the past decade, this number only appeared twice in March 2016 and January 2019!
Why is the price near its historical high, but the P/E ratio hit a ten-year low? Because of its future profit expectations (E) growth rate, it has far outpaced the pace of price (P) gains. The market is always worried that Nvidia will repeat the crash of the periodic chip stock, but Nvidia's performance is highly certain when giants like Meta still can pour $21 billion into buying power. This contraction in the P/E ratio, driven by strong fundamental growth, is the dream “gold cross-buying point” for value investors and trend traders.
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