The rise of NVIDIA Corporation (NASDAQ: NVDA) shares over the past 12 months or so has been truly remarkable to watch. In October 2022, Nvidia shares were going for just US$112 each, just a whisker off of the company's current 52-week low of US$108.13.
However, fast forward to last night, and the Nvidia stock price closed at US$471.63. That's a whopping 320% higher than where this semiconductor stock was in October last year, as well as 229.5% higher than the US$143.15 Nvidia started 2023 at. If you don't believe me, just check out this chart below for some visual confirmation:
Of course, these gains haven't come out of nowhere. Investors have been blown away by the growth that Nvidia, now a US$1.16 trillion company, continues to show off. As we covered just yesterday, Nvidia's second-quarter revenues ended up coming in at a record US$13.51 billion, blowing the company's already ambitious previous US$11 billion guidance out of the water by 22%.
Even more impressive was Nvidia's quarterly income. The company posted an income figure of US$6.2 billion, an increase of… wait for it… 843% from the same quarter last year.
It gets better. Nvidia also told investors to expect revenues of US$16 billion (with a 2% buffer) for the current third quarter of 2023. That would be an 18.4% increase over its second-quarter numbers.
So it's clear that Nvidia is a company in a hurry, and is rapidly making huge strides in semiconductors and artificial intelligence (AI).
But this leaves a question for investors: is it too late to buy Nvidia shares today after this stunning runup in 2023?
Are Nvidia shares a buy at US$470?
Well, Nvidia shares certainly don't look cheap right now. As we highlighted yesterday, the company is now sitting on a price-to-earnings (P/E) ratio above 110.
That implies that a lot more growth is already built into the Nvidia stock price.
Now, this could happen. Nvidia is certainly good at beating expectations, as we've already established. But it could be a hard ask. Our Fool colleagues over in the US have recently reported the following:
Several big companies, including Advanced Micro Devices, Amazon, Microsoft, and Alphabet, are developing their own chips for AI training and inference. While Nvidia is likely to continue to dominate the market, these competing efforts could impact the current dynamics that are creating such a massive tailwind for the company.
There's also that pesky detail of Nvidia's valuation. The stock already traded at 19 times projected 2025 sales before the Q2 update. At best, much of Nvidia's growth is already baked into the price. At worst, its price is well ahead of the company's realistic growth prospects.
While I think Nvidia is one of the most exciting companies in the world right now, I'd struggle to call the company a buy at its present stock price. A lot would have to go right for Nvidia to even hold its current valuation going forward, let alone see it continue to balloon as it has over the past year.
It's certainly possible that Nvidia can pull this off. But I think you're flipping a coin on that possibility, considering the competition from other top-notch companies like Alphabet and Amazon. And that's not something I like to do when it comes to investing. So I'm holding off on Nvidia for now. But I'd certainly take another look if this AI darling experiences a pullback over the coming months.
