The steep price rise of Nvidia shares – what’s behind it and is it valued too high?

The steep price rise of Nvidia shares – what’s behind it and is it valued too high?

According to a report by www.aktienwelt360.de, the shares of US chip developer Nvidia have risen by a whopping 121% since the beginning of the year and have almost reached their all-time high from the end of 2021. With a market capitalization of $783 billion, Nvidia is now the sixth most valuable publicly traded company, ahead of even companies like Berkshire Hathaway and Tesla. The reason for the steep price rise is mainly due to the hype surrounding artificial intelligence. Nvidia offers high-performance microprocessors and platforms for generative AI applications and works with companies such as Adobe, ASML and Microsoft. In addition, the quarterly figures performed better than expected, especially the gaming business. Nevertheless, the financial valuation of Nvidia shares is extremely high, with a P/E ratio of 182 and a P/S ratio of 29. Potential competitors in the field of AI chips are also mentioned, such as Qualcomm, Microsoft and Alphabet. Still, Nvidia is seen as well-positioned to continue growing revenue and profits. The article concludes by saying that the stock is too expensive based on the current price, but should be held due to its good long-term prospects.

In addition to the information from the article, other facts can be analyzed about the impact of this price increase on the market and the financial industry. Nvidia's high stock price could lead to other technology companies coming into investors' focus as they may offer lower valuations and higher growth potential. This could lead to a reallocation of investments, which could impact the market as a whole. Additionally, Nvidia's rising stock price could also raise investor expectations for other technology companies such as Qualcomm, Microsoft and Alphabet, as they are seen as potential competitors to Nvidia. The demand for AI chips and AI applications could continue to increase, which could have a positive impact on the semiconductor and software development market.

It is important to note that these effects depend on various factors and are not guaranteed. The market and the financial industry depend on many variables, such as supply and demand, market sentiment and global economic conditions. Thorough research, analysis and evaluation of all relevant factors is therefore essential in order to make informed financial decisions.