The sustainability of NVIDIA Corp’s NVDA stock price, fueled by the AI boom, is under scrutiny by one analyst.
One Analyst’s Doubts: Sarah Kunst, managing director at Cleo Capital, expressed her concerns about Nvidia’s stock price in a recent CNBC interview. Kunst highlighted the stock’s price-to-earnings ratio of 97, much higher than its trillion-dollar peers, suggesting a potential bubble.
Kunst believes that although the stock logically rose due to the booming AI industry, the current valuation is unsustainable. She attributed the stock’s surge to the influx of cash into the market, driven by optimism.
While recognizing the positive aspect of Nvidia’s rise in an overall bullish market, Kunst stressed that the stock’s current valuation is not justified by its fundamentals.
The Impact: Nvidia’s stock has experienced a remarkable upward trajectory, largely due to the rapid growth of the AI industry. The company’s market capitalization recently surpassed that of Alphabet and Amazon, making it the world’s fourth most valuable company.
However, some experts, like Josh Brown of Ritholtz Wealth Management, believe that the market may have reached its peak for the year, with Nvidia’s stock being a prime example of excessive market exuberance.
Meanwhile, influential investor Cathie Wood recently reduced Ark Invest’s stake in Nvidia amid the stock’s surge, indicating a cautious approach to the company’s future prospects.
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