For once, Nvidia Corp's (NASDAQ:NVDA) numbers are growing faster than its valuation — and that's saying something.
After months of AI euphoria and multiple expansion warnings, Nvidia might actually be drifting into a valuation zone that even cautious investors can live with. In market terms, that's called a "sweet spot."
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Earnings Keep Surging, Valuation Keeps Shrinking
Despite a 36% rally over the past year — and 76% in just six months — Nvidia's trailing P/E now sits at 53.8, below its five-year average of about 54.5. The forward P/E has slipped to 29.9, also under its five-year mean of 34.3, according to Yahoo Finance data.
That's not just statistical trivia. It's the first time in a while that Nvidia's fundamentals have outrun its hype. As profits surge faster than price, the multiple compression investors once feared has turned into something better — a valuation runway.
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From Frothy To Fundamentally Sound
Nvidia's market cap has swelled to $4.6 trillion, but its enterprise value is holding steady near $4.56 trillion — suggesting this rally isn't just speculative froth. Analysts are finally starting to frame the stock less as a bubble and more as a dominant profit machine entering a sustainable growth phase.
AI demand remains insatiable, from hyperscalers like Microsoft Corp (NASDAQ:MSFT) and Meta Platforms Inc (NASDAQ:META) to new AI model players scrambling for GPUs. Yet, with earnings growth keeping pace, Nvidia's price is no longer running away from its fundamentals — it's syncing with them.
The Street's Quiet Realization
The irony?
The Street is only just catching on. After months of warnings about "AI exuberance," analysts are now shifting tone — not because Nvidia cooled off, but because it didn't have to. It's still the one company delivering both exponential top-line growth and valuation discipline in the same breath.
Nvidia isn't cheap — it's rarely been. But for the first time in years, it's reasonably priced for the growth it's printing. With the stock near its 52-week high of $195.62, the risk-reward balance looks steadier than it has since the AI boom began. In short: Nvidia's not overheating — it's cruising.
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