Nvidia’s stock price surged after a recent split, benefiting from its dominant position as a chip supplier for the AI market. The company’s stock has seen a 190% increase over the past year, attracting attention from big tech players like Amazon, Microsoft, and Alphabet. To make its shares more accessible, Nvidia executed a 10 for 1 split earlier this month, resulting in a 33% increase in share price since the announcement.
While Nvidia’s P/E ratio of 70 may seem high compared to other tech giants like Microsoft and Apple, the company’s growth rate justifies its valuation. The PEG ratio, which considers growth prospects, shows Nvidia as undervalued with a ratio below 1. Despite its massive size, Nvidia continues to grow rapidly, with a fiscal 2025 second-quarter revenue target of $28 billion, representing a 107% increase year over year.
Nvidia’s strong position in the AI chip market, coupled with high demand for its products, gives it a competitive edge over companies like AMD. With AI projected to add trillions to the global economy by 2030, Nvidia has significant room for growth if it can maintain its market share and innovation lead.
Alphabet executive Suzanne Frey serves on the board of directors for The Motley Fool, a company that recommends investing in Nvidia, Amazon, Microsoft, and other tech giants. The Motley Fool advises investors on options related to these companies and has a disclosure policy in place.
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