Nvidia stock’s been getting cheaper. Time to buy?

In recent years, Nvidia (NASDAQ: NASDAQ) has been on an incredible streak. Nvidia stock is up 1,001% in five years. That is impressive – but has also meant that its valuation has been too expensive for me to want to buy any.

But the stock is down 13% over the past month. Meanwhile, ongoing strength in the firm’s financial performance means that the valuation has lately become more attractive.

Specifically, Nvidia’s stock price now sits at around 31 times earnings.

I’m getting tempted!

I do not have a hard and fast rule when it comes to what price-to-earnings (P/E) ratio is right for me when looking at possible shares to buy for my portfolio.

As a general rule of thumb though, anything higher than 20 can be enough to make me nervous.

There are exceptions.

One can be when a company’s earnings are moving around a lot, perhaps because of business volatility or simply because the business is growing its profits fast.

The latter is certainly true of Netflix. A single quarter’s earnings can only ever provide a snapshot of a company’s performance, but Netflix’s latest quarter is nonetheless illuminating. Diluted earnings per share were up by 86% compared to the prior year quarter.

That is consistent with the stellar revenue and earnings growth delivered by Nvidia over the past few years, as AI has led to a surge in demand for its proprietary chip designs.

If earnings per share keep growing – which in…