Nvidia Stock Has Risen 1,500% in 3 Years: Is It in a Bubble?

Core Viewpoint - Nvidia has become the world's largest publicly traded company, with its stock price increasing approximately 1,500% over the past three years, raising concerns about potential overvaluation and bubble risks [1][2]. Group 1: Stock Performance and Valuation - Nvidia's market capitalization is around $4.4 trillion, exceeding Microsoft by over $600 billion, which presents challenges for further growth as doubling its value would require reaching $8.8 trillion [3]. - The company's price-to-book ratio stands at 44, significantly higher than the S&P 500 average of 5.5, indicating potential bubble territory [4]. - Despite the high valuation metrics, Nvidia's current P/E ratio of 52 is above the S&P 500 average of 30, but its forward P/E ratio of 40 is closer to the average, suggesting that the stock may not be in bubble territory [10][12]. Group 2: Revenue and Growth Trends - Nvidia's revenue grew by 62% in the first half of fiscal 2026, contributing to the increase in accounts receivable and inventory, which rose by 97% and 122% respectively [7][8]. - The company's net income for the same period reached $45 billion, reflecting a 43% year-over-year growth [8]. - However, revenue growth is slowing compared to the previous year's 121% increase, which could lead to market punishment for decelerating growth [9]. Group 3: Operational Risks - Nvidia's reliance on Taiwan Semiconductor (TSMC) for chip manufacturing exposes it to geopolitical risks, particularly concerning tensions between China and Taiwan [5]. - The significant increase in accounts receivable and inventory raises concerns about the company's ability to convert these into cash and deliveries, which could impact stock performance [6]. Group 4: Investment Outlook - Despite concerns about overvaluation, Nvidia's strong revenue growth and historical performance suggest it may be closer to a value stock than a bubble stock, with expectations of continued market outperformance [11][13].