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Yahoo
16 hours ago
- Business
- Yahoo
Nvidia stock hit an all-time high this week. But could it be a bargain, even now?
With a market capitalisation north of $4.2trn, chip company Nvidia (NASDAQ: NVDA) might not seem like an obvious bargain at first glance. Nvidia stock sells for 56 times earnings. Again, that does not necessarily sound like a screaming bargain. But Nvidia is no ordinary stock. The company recently became the most valuable listed business in history. The Nvidia stock price has risen 1,602% over the past five years. That is the sort of performance that many stock market investors dream of. However, am I too late to the party? Or could buying Nvidia stock for my portfolio even now potentially turn out to be a bargain when looking back a few years from now? Dramatic business improvement One of the difficulties in valuing Nvidia, whether one sees it as too pricy or a bargain, is the speed at which its business has grown in recent years. Last year, for example, revenues were $131trn. Five years before, they had been $11trn. Could it be that this is an exponential growth machine, so that even the current revenues might look comparatively small a few years from now? Or might it be that the recent years have seen a one-off boom in AI-led chip demand? And once that demand is fulfilled, will it fall away meaning Nvidia's revenues start getting much smaller? The answer to that question is critical, I reckon. If revenues fall significantly, earnings almost definitely will too. If earnings fall, the current Nvidia stock price could be too pricy. However, while revenue growth over the past five years has been incredible, earnings have been growing even faster. Last year's net income of $73bn compared to $3bn five years before. If AI heralds a permanent shift in chip demand and we are only in the early stages, that could be brilliant news for Nvidia. Economies of scale could mean that earnings growth outpace revenue growth, as happened in recent years. In that case, the current Nvidia stock price could yet turn out to be a bargain. Risky, but potentially rewarding What will happen? We do not know. What is clear, however, is that Nvidia has significant strengths that could help it keep doing well if chip demand remains buoyant. They include proprietary chip designs, a world-class workforce, strong brand, and established relationships with a large roster of existing clients. Those things all strike me as strengths and help explain why, at the right valuation, I would certainly be happy to add Nvidia to my portfolio. The question I wrestle with is whether the current valuation feels right to me. It does not, which is why I will not be adding Nvidia stock to my portfolio for now. For the reasons I outlined above, I see a strong case for the share to keep soaring in coming years. But that largely depends on the outlook for chip demand. That remains uncertain. Tariff disputes and growing competition could also eat into Nvidia's profitability. I do not think those risks are properly reflected in the current share price. The post Nvidia stock hit an all-time high this week. But could it be a bargain, even now? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
2 days ago
- Automotive
- Yahoo
Nvidia Rally Shows Signs of Overheating as Gains Blow Past 80%
(Bloomberg) -- Nvidia Corp. traders keep getting reasons to buy the stock, but the breakneck rally is showing signs of overheating. The Dutch Intersection Is Coming to Save Your Life Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests Mumbai Facelift Is Inspired by 200-Year-Old New York Blueprint LA Homelessness Drops for Second Year Manhattan, Chicago Murder Rates Drop in 2025, Officials Say The chipmaker's 14-day relative strength index topped 80 on Friday, the highest since June 2024 when the stock dropped more than 20% over the following six weeks. The momentum gauge tracks the speed of a stock's recent price changes and a reading over 70 is a signal to some analysts that buying is at extreme levels. 'It's definitely getting overbought, and while that doesn't mean a reversal is imminent, this is something to be mindful of,' said Jonathan Krinsky, chief market technician at BTIG. 'It feels like sentiment, which had been optimistic, is getting borderline giddy.' Nvidia, which dominates the market for chips used in artificial intelligence computing, has staged a dramatic reversal since April when a broad tariff-induced selloff added to fears about a potential pullback in AI spending. Since then, the firm's biggest customers have continued to plow more money into the development of AI services and investors have flocked back to the stock, pushing it up 84% in less than four months. The latest leg of the rally has been driven by news that Nvidia plans to resume sales of some AI chips in China with the approval of the US government. The policy reversal from President Donald Trump's administration could help recover a large chunk of the $15 billion in Nvidia's fiscal 2026 data center revenue that had been at risk from US chip export restrictions, according to Bloomberg Intelligence analyst Kunjan Sobhani. This week, Trump also touted more than $92 billion in commitments to invest in AI and energy infrastructure, while Meta Platforms Inc. CEO Mark Zuckerberg affirmed plans to spend 'hundreds of billions of dollars' on data center investments. The Facebook parent is Nvidia's second-largest customer, after Microsoft Corp., according to supply chain data compiled by Bloomberg. Nvidia is on track for its eighth-straight week of gains and the rally from its April low has added roughly $1.9 trillion to its market value, a figure that alone exceeds the market capitalization of Meta. At more than $4.2 trillion, Nvidia is again the world's most valuable company, topping second-ranked Microsoft by about $400 billion. 'Clearly, momentum is behind it,' said James Abate, managing director and head of fundamental strategies at Horizon Investments. 'It seems like every time we get incremental good news, buyers rush in and we get another leg up in the stock.' Still, Abate has used the advance to sell some Nvidia shares. In addition to the rising valuation, he said he's concerned that investors are underestimating the potential for 'the future cyclicality of the AI business.' Nvidia is priced at 34 times earnings expected over the next 12 months, up from a low of less than 20 in April, but well below the average of about 40 over the past five years. Most on Wall Street remain bullish about Nvidia's prospects on increasing positive signs about AI demand, including a robust forecast from Taiwan Semiconductor Manufacturing Co. on Thursday. Of the 79 analysts tracked by Bloomberg that cover the company, just one has a sell recommendation, while nine rate the stock neutral. Investors will be paying close attention in coming weeks to earnings results from Big Tech companies for hints about capital spending plans. Alphabet Inc. is scheduled to report on July 23, followed by Microsoft and Meta on July 30. Those three companies and Inc. account for more than 40% of revenue for Nvidia, whose results are due in late August. Rhys Williams, chief strategist at Wayve Capital Management, sees no reason to take profits on Nvidia with all signs pointing to AI spending continuing. 'Nvidia has had a nice breakout, and it will need to have a good quarter and raise its outlook, but we expect that will happen,' Williams said. 'We probably have another year or two of strong data-center growth.' Top Tech Stories While rival media companies are unloading assets and cutting costs, Netflix Inc. continues to thrive. The owner of the world's most popular paid streaming service on Thursday reported second-quarter results that exceeded investor expectations in every major metric, saying revenue grew to $11.1 billion and earnings jumped to $7.19 a share. The company also raised its forecast for full-year sales and profit margins. Days after a White House meeting with President Donald Trump, Jensen Huang was being hailed by an audience on a stage in Beijing. Meta Platforms Inc. hired a pair of key artificial intelligence researchers who worked at Apple Inc., shortly after poaching their former boss from the iPhone maker. Perplexity AI Inc., whose artificial intelligence-powered search engine competes with Google, has raised fresh capital in a deal that values the startup at $18 billion, according to a person familiar with the matter. Taiwan Semiconductor Manufacturing Co. plans to be cautious with capital expenditure due to tariff-related uncertainties, according to Chief Financial Officer Wendell Huang. Earnings Due Friday No major earnings expected --With assistance from Matt Turner and Subrat Patnaik. (Updates RSI data in second paragraph, share gain in fourth paragraph.) What the Tough Job Market for New College Grads Says About the Economy How Starbucks' CEO Plans to Tame the Rush-Hour Free-for-All Godzilla Conquered Japan. Now Its Owner Plots a Global Takeover A Rebel Army Is Building a Rare-Earth Empire on China's Border Why Access to Running Water Is a Luxury in Wealthy US Cities ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Alibaba (BABA) Soars 8% on US Chip Exports Ease to China
We recently published . Alibaba Group Holding Limited (NYSE:BABA) is one of Tuesday's top performers. Alibaba grew its share prices for a fourth straight day on Tuesday, jumping 8.09 percent to close at $116.97 apiece, as investor sentiment was buoyed by the improving relations between China and the US amid the latter's recent move to ease up on chip exports. Alibaba Group Holding Limited (NYSE:BABA) traded higher alongside its Chinese counterparts after the US gave the green light for Nvidia Corp. to resume selling H20 AI chips to China. Alibaba Group Holding Limited (NYSE:BABA)—a China-based technology company specializing in e-commerce—stands to benefit from the move, particularly through its cloud computing subsidiary Alibaba Cloud—one of the several Chinese firms that heavily relied on H20 chips. An e-commerce platform displaying a wide range of products to customers online. More broadly, the US' move signaled easing trade tensions between the two countries and sparked more confidence for Chinese firms pursuing technology investments and infrastructure expansion. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Bloomberg
2 days ago
- Business
- Bloomberg
Nvidia Rally Shows Signs of Overheating as Gains Blow Past 80%
Nvidia Corp. traders keep getting reasons to buy the stock, but the breakneck rally is showing signs of overheating. The chipmaker's 14-day relative strength index briefly topped 80 on Thursday, the highest since June 2024 when the stock dropped more than 20% over the following six weeks. The momentum gauge tracks the speed of a stock's recent price changes and a reading over 70 is a signal to some analysts that buying is at extreme levels.
Mint
2 days ago
- Business
- Mint
Nvidia CEO Huang Emerges as Reluctant Emissary in US-China Clash
Days after a White House meeting with President Donald Trump, Jensen Huang was being hailed by an audience on a stage in Beijing. On his third trip to China this year, the world's ninth richest man announced this week that Nvidia Corp. will resume China sales of its H20 chips, an abrupt policy reversal from the Trump administration. He also opened a major supply-chain expo in Beijing — speaking briefly in Mandarin, as requested by his host, former Chinese Commerce Ministry official Ren Hongbin — with a clarion call for closer business ties. The episode showed that Huang, 62, is becoming increasingly adept at pulling off a delicate diplomatic dance that is both benefiting his company and helping the world's biggest economies manage their differences. The Nvidia boss has long been leery of politics. In January, he was among the few American tech tycoons who stayed away from Trump's inauguration ceremony, spending that week in China where his firm has some 4,000 staff, and Taiwan. Yet trying to keep Washington and Beijing from escalating a rivalry that's weaponized his technology has now become a key part of his job description — whether he likes it or not. With Trump and Chinese President Xi Jinping yet to set a date for an in-person summit that's expected in the coming months, a broader question is whether he could emerge as some sort of go-between. While Tesla's Elon Musk and Apple Inc. chief Tim Cook have fallen out of favor with Trump to differing degrees, Huang has maintained warm ties with the unpredictable US leader. 'Huang is obviously on good terms with Trump administration. Yet his chip business is one of the biggest flashpoints between Beijing and Washington,' said Feng Chucheng, founding partner of Hutong Research. 'It's possible the two leaders may want such a channel for messaging, but is he willing to?' Nvidia didn't immediately reply to an emailed query outside of regular hours. How much access Beijing will grant Huang remains to be seen. During this trip, the chip boss sat down with Vice Premier He Lifeng, who is spearheading China's trade war negotiations, and Commerce Minister Wang Wentao, but wasn't given an audience with the top echelon of leaders. 'It would be an honor to see President Xi,' Huang said. 'I just wasn't invited.' Shuttle diplomacy has become de rigueur for corporate chiefs aiming to retain major business in the world's biggest economies, given the political sensitivities and suspicions in each capital city toward the other. Apple's Cook similarly has regularly visited China while seeking to engage with the Trump administration. It's unclear how much sway such figures have, beyond smoothing a path for their own business operations. Expectations for Musk — whose EV giant has a significant presence in China — to become a back channel in US-China ties never materialized. The Tesla boss stayed quiet on matters involving Beijing this year, before leaving the Trump administration. While Huang has little political ambition, he has argued to successive US administrations that tightening a chip-export ban would only incentivize China to foster a homegrown industry. His rationale is simple: Allowing Nvidia to compete with China's champion, Huawei Technologies Co., on its own turf is essential to America winning the AI race. Huang, whose company became the first to hit a $4 trillion market valuation this month, brushed off speculation that he influenced Trump's recent U-turn. Speaking to a group of reporters in Beijing, he said: 'I don't think I changed his mind.' Over the years, Huang has demonstrated himself to be well-versed in local Chinese culture and able to make himself popular on trips. Photos of him dancing in a vest with a flowery print — traditional to China's northeast — during his company's annual party last year went viral online in the Asian country. Chinese state media outlets this week highlighted the good news on H20 chips, which still fall short of Nvidia's most cutting-edge products. For his part, the Taiwan-born naturalized American showered praise on Chinese tech researchers and entrepreneurs, name-dropping local AI companies, posing for photos with Xiaomi CEO Lei Jun and telling reporters it's the American people's 'misfortune' that Xiaomi electric vehicles aren't available in the US. 'He's a skillful CEO who, like the Apple CEO and others, must navigate the China and non-China technology ecosystems to the maximum extent possible,' said Kurt Tong, a former US consul general in Hong Kong and a partner at the Asia Group. The Taiwan-born billionaire has steered clear of controversy. He was quick to clarify his remarks after referring to the self-ruled democracy as a 'country' last year while touring one of the island's night markets. That reference displeased Beijing, with a spokesperson at the office handling Taiwan affairs calling on him to 'read up on the history.' Days later, Huang said: 'I wasn't making a geopolitical comment, but thanking all of our technology partners here for all their support and contributions to the industry.' That stands in contrast to fellow tech titan Musk who publicly said Taiwan should effectively be under Beijing's control, aligning with Xi's view of the matter. Huang has limited his comments on the Taiwan Strait to how US chip restrictions could influence Beijing's calculations on a possible invasion of the island where much of the world's semiconductors, including Nvidia's, are made. 'You got to ask yourself, at what point do they just say, 'F—- it. Let's go to Taiwan. We've got nothing to lose.' At some point they will have nothing to lose,' he told Bloomberg Businessweek in 2023. Tech is a particularly sensitive sector for a CEO to act as a bridge between the two nations, because of a strategic desire on both sides to decouple in the long term, said Dominic Chiu, senior analyst at Eurasia Group. But there may still be a more immediate opening. 'In the short run, in the midst of these negotiations and transactional deals and back-and-forth, there could be some space for these tech firms to be bridges,' Chiu said. With assistance from Ian King, Josh Xiao, Lucille Liu, Jessica Sui, Colum Murphy, Luz Ding and Alan Wong. This article was generated from an automated news agency feed without modifications to text.
