LemonTrades
TL;DR
- Not on today’s profits: Nvidia trades at about 23 times the last 12 months’ earnings, below the S&P 500’s roughly 25.
- On next fiscal year’s expected earnings, it’s about 11 to 12 times, which is very low for a company growing this fast.
- A low multiple can be a warning, though: investors may not believe those profits will last. Chip makers often look cheapest at the top of a boom.
- LemonTrades tells you what moved Nvidia, and why, as it happens, and warns you before its earnings.
Being worth over $4 trillion doesn’t make a stock expensive. What counts is the price compared with what it earns. Here’s that math, live.
The case that it’s cheap
- Profits have grown faster than the price. Earnings per share went from $2.94 in fiscal 2025 to $4.90 in fiscal 2026, and $7.91 over the last 12 months.
- Revenue is still surging: $96.2 billion last quarter, with analysts forecasting about $412 billion this fiscal year.
- It sits below the market’s P/E while growing many times faster than the average company.
The case that it’s expensive
- Peak profits look cheap. Companies in boom-and-bust industries often have their lowest P/E just before earnings fall. If profits halve, a P/E of 23 becomes 46.
- The forecast is the whole story. Analysts expect sales to more than double in two years, and that requires a handful of customers to keep spending record sums.
- Competition: big customers are designing their own chips, and AMD and Broadcom want a bigger share.
- Margins: profit margins this high tend to draw rivals and pressure from customers.
What would settle it
| Watch | Good sign | Warning sign |
|---|---|---|
| Data center revenue | Keeps beating forecasts | Growth slows suddenly |
| Customer spending plans | Raised again | Cut or delayed |
| Gross margin | Stays in the 70s | Falls for several quarters |
| Stock’s reaction to earnings | Rises on good news | Falls on good news |
So is it overvalued?
If analysts are close to right, no. If AI spending slows, the stock could fall a long way, as it did in 2022, when it dropped about 66% from its high. That’s the risk you’re weighing, not the P/E. Next test: earnings on November 17. See NVDA stock prediction and Nvidia’s biggest drops.
Sources
Education, not financial advice. All investing involves risk, including the loss of your money. See our disclaimer.
