Nvidia's market capitalization briefly topped $2 trillion on Friday, and as the most valuable semiconductor company, the company's market capitalization is already more than three times that of second-place Broadcom. However, some ** analysts said that although Nvidia continues to rise sharply, from the perspective of the price-earnings ratio indicator, Nvidia is not expensive among many technology companies.
Shares of Nvidia have jumped 21% since Wednesday reported its red-hot fourth-quarter results, leading investors to believe that the AI craze is far from over. In early trading on Friday, Nvidia had the highest gain of 49%, the stock price rose as high as $823, setting a new all-time high, and the market capitalization briefly exceeded 202 trillion dollars.
However, Nvidia failed to maintain the rally at the beginning of the session, giving up all its gains at midday and quickly turning 1% lower, the lowest at 775$71, then hovering near the flat line, and the market capitalization also fell below the $2 trillion mark again.
Previously, only Microsoft, Apple and Saudi Aramco had previously reached the $2 trillion market capitalization level. For a chip company, this is a huge achievement: TSMC, which actually makes most of Nvidia's products, ranks third in terms of market capitalization among semiconductor companies, with annual revenues about 16% higher than NVIDIA, but only about $569 billion in market capitalization. Broadcom, which is ranked second, has also benefited from the AI boom, with the company's share price doubling last year and now worth $605 billion.
* Believes that NVIDIA's skyrocketing profits are due to its leadership in AI technology, which provides strong support for its soaring market capitalization. Based on a market capitalization of $2 trillion and Wall Street**'s current fiscal year profits, NVIDIA's share price is trading at a price-to-earnings ratio of about 344 times, which is actually 10% lower than the P/E ratio of some of the same stock prices analyzed by the US media.
At the same time, compared to when Nvidia's earnings report began to take off in May, the price-to-earnings ratio is now just about half of what it was then. At the time, analysts expected Nvidia to make about a quarter of their current profit in the fiscal year.
A market cap of $2 trillion is not an elusive target for analysts, and most analysts now have price targets for Nvidia that meet or exceed that threshold. Now, several analysts expect Nvidia's share price to reach or exceed $1,000, up 23% from current levels**. Some analysts said on Thursday that Nvidia was printing money.
At the same time, according to the analysis of the data company, Nvidia's surge has brought about $3 billion in paper losses to the bears, which is known as an "AI-generated nightmare" for short sellers.
Analysts believe that this surge is another blow to contrarian investors who are betting that Nvidia's valuation and speculation are already too high, and expect the bubble to burst. According to the data, Nvidia is the third largest short-selling stock in the U.S. stock market, and the shorts have borrowed $18.3 billion of Nvidia.
Analysts say early paper losses are inevitable for many short sellers seeking to take short orders after Nvidia's earnings release. "Short sellers may wait a little longer to find a more favorable exit point. ”
Nvidia's rally has triggered a broad range of U.S. stocks across the semiconductor sector**. The data shows that the bears suffered a paper loss of $4.3 billion in a single day due to semiconductors**. Semiconductors were the worst-performing sector to short this year, with a paper loss of $7.2 billion in February. The Philadelphia Semiconductor Index is up nearly 65% in 2023 and another 13% this year.