Nvidia will be the first company to acquire a market value of $4 trillion
Nvidia won a market capitalization of $4 trillion on Wednesday, becoming the world’s first public company to reach a milestone.
nvidia (NASDAQ: NVDA) It is one of the best AI stocks on the market. However, with chipmakers currently trading at a price of 26.4 and multiples of sales, many investors may wonder if the stock is too expensive to buy. Don’t be fooled: Nvidia stocks are still at reasonable prices.
Nvidia stocks aren’t as expensive as they look
NVIDIA designs graphics processing units (GPUs) that provide the processing power needed to support the latest AI and machine learning software. The company’s total margin is approximately 60% – Almost twice as many competitors as Intel – It reflects the comparison of cutting edge chips with rival offerings. Nvidia can claim more products for its products, primarily due to its performance advantage and the value of its widely used software platform. This allows developers to easily program chips for specific tasks.
Nvidia’s hardware is essentially powering the AI revolution. Most analysts believe they currently have a market share of 85% to 90% on AI accelerator chips. With AI infrastructure spending expected to increase by more than 30% per year through 2033, Nvidia could actively grow its sales base over the next decade at least.
Investor optimism about all this makes the stock trade at an expensive 26.4x sales. However, measuring stocks against the company’s profits and ultimate outlook will significantly improve your valuation.
Data by ycharts.
NVIDIA shares are currently trading at around 51x revenues. It’s still quite premium. However, revenues are rising so rapidly that the stock will trade just 36.9 times its earnings next year. If we can maintain our total margin, our stock valuations could continue to improve dramatically year by year due to rapid sales growth. Nvidia’s ratings look quite reasonable compared to competitors like Intel, which have lost money in each of the last three quarters.
Certainly, stocks weren’t cheap, and stocks reached a $4 trillion market capitalization threshold. However, for patient investors willing to pay prepaid premiums, they can still prove profitable.
Ryan Vanzo has no position in any of the stocks mentioned. Motley Fools introduces and recommends Intel and Nvidia. Motley Fool recommends the following options: A short Intel phone for $24 in August 2025. Motley Fools have a disclosure policy.
The Motley Fool is a partner at USA Today, providing financial news, analysis and commentary designed to help people control their financial lives. The content is produced independently of USA Today.
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