By Simon Edelsten
Publication Date: 2026-01-10 05:00:00
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The new year has started in much the same way as the last one ended: with a lot of talk about bubbly valuations. The fact the S&P 500 hit an all-time high this week, didn’t help.
But how do you value what is undoubtedly the stock of the decade?
Nvidia, the world’s most valuable company, has seen its share price rise over 3,000 per cent since the start of 2020. It’s now worth $4.5tn.
But is it really?
The company has risen from being the leading maker of semiconductors for gaming consoles to being the leading processor for bitcoin mining and, now, the poster child of AI.
These successes spring from the decision by founder and chief executive Jensen Huang many years ago to use parallel processing of data, which made Nvidia’s chips faster and more energy efficient than its rivals.
More recently that has made them the first choice for AI “training” — giving Nvidia power to raise prices and lifting operating margins from the mid-teens a decade ago to about 60 per cent last year.
The company should make an operating profit of more than $120bn this year — more than the total value of all but the four biggest FTSE 100 companies. Its recent $20bn deal with AI chip start-up Groq is expected to help maintain its position in the high specification part of the market.
But are its shares now too expensive? (Spoiler alert: we don’t own…
