Kellye Johns
Jun 03, 2024 - 08:10

Why Nvidia Stock is Expensive and How Numbers May Shift

Nvidia's stock has more than doubled this year, becoming the third most valuable company in the S&P 500. Eye-popping growth!

Nvidia has been on a meteoric rise in the stock market, with its stock price more than doubling this year and tripling in 2023. The company is now the third most valuable company in the S&P 500, thanks to its innovative technology and advancements in artificial intelligence (AI) applications.

One of the key factors driving Nvidia's success is the soaring demand for its semiconductors, which power AI applications. In fact, the company's revenue more than tripled in the latest quarter compared to the same period last year.

Nvidia is also set to undergo a stock split, giving each investor nine additional shares for every one they already own. This move aims to make the company's shares more affordable for investors and increase accessibility to a wider range of shareholders.

With a revenue of $26 billion in the most recent fiscal quarter, Nvidia is projected to bring in $117 billion in fiscal 2025. This growth trajectory is impressive, considering the company's market value has increased by $96.6 billion in early trading on Monday.

As of the close of trading Friday, Nvidia's total market value stood at $2.738 trillion, surpassing tech giants like Amazon and Alphabet. Just two years ago, the company was valued at around $418 billion, showcasing its remarkable growth and market dominance.

Nvidia's estimated net margin of 53.4% highlights its profitability, with over half of its revenue translating into profit. This figure outperforms industry giants like Apple and Microsoft, showcasing Nvidia's strong financial performance and position in the market.

Overall, Nvidia's success can be attributed to its cutting-edge technology, strategic investments in AI, and consistent revenue growth. The company's stock split and impressive financial metrics signal a promising future for Nvidia as a leader in the semiconductor industry.