Is Nvidia Stock Overvalued?

Core Viewpoint - Nvidia's stock is considered attractively valued despite claims of being overvalued, particularly in the context of its significant earnings growth and market position in AI chips [1][2][3]. Valuation Metrics - There is no universally accepted method for stock valuation, and claims of overvaluation are subjective opinions rather than facts [5]. - The price-to-sales (P/S) ratio is deemed less useful for Nvidia, as the company's strong earnings and cash flow growth are more relevant for stock price determination [6][8]. - The P/E ratio should be analyzed in conjunction with earnings growth; a higher P/E can be justified by superior earnings growth [9][10]. Comparative Analysis - A comparison of Nvidia's P/E and PEG ratios with those of Microsoft illustrates that Nvidia's stock was attractively valued based on its earnings growth, despite a higher P/E [16][19]. - Nvidia's PEG ratio of 0.881 indicates it remains attractively valued, suggesting that the stock is not currently overvalued [19]. Performance Metrics - Nvidia's stock has returned 1,350% over three years, significantly outperforming Microsoft, which returned 28% over the same period [2][19].