Nvidia completes 10-for-1 stock split, market cap surges to $3 trillion, but caution advised'

From Nasdaq: 2024-06-08 05:06:00

Nvidia has completed its 10-for-1 stock split, making shares more affordable for retail investors. The company’s market cap has surged to $3 trillion, driven by AI success. Nvidia’s innovative advantage, including the popular H100 GPU, is boosting demand and margins. Despite the stock’s 738% gain, some caution is advised due to impending challenges.

Investors should take heed of historical patterns in technological innovations like AI. Every new trend faces a burst bubble event, including genome decoding, blockchain, and now AI. Nvidia’s prediction of a decline in gross margin indicates potential pricing power issues. Its high valuation compared to TTM sales also raises red flags.

The Motley Fool warns investors not to overlook historical valuation patterns when considering Nvidia. The company’s multiple of 38 times TTM sales echoes past tech bubble peaks. While Nvidia remains relatively inexpensive based on PEG ratio, it is crucial to assess the risk factors, including declining gross margins and historical valuation comparisons.



Read more at Nasdaq: Nvidia Has Completed Its 10-for-1 Stock Split: Here’s Why I’m Still Not Touching This Artificial Intelligence (AI) Titan With a 10-Foot Pole