NVIDIA Stock Continues Impressive Run Amid Valuation and Business Questions

Over the last twelve months, NVIDIA (NVDA) stock has gained 35%, ranking in the top 38% of large US stocks on trend strength and sitting as the most valuable company tracked by Trefis. The chipmaker's revenue grew by 83% over the period, significantly outperforming the S&P 500 median of 8.4%. Furthermore, the company translated this growth into high profitability, achieving an operating margin of 65% compared to the index median of 18.6%.

This performance has been driven by surging demand for AI integrated platforms. NVIDIA's revenue opportunity has expanded from roughly $18 billion per gigawatt with its Hopper platform to $40 billion with the new Vera Rubin platform. Growth is also diversifying beyond hyperscale cloud providers, with management stating that its ACIE segment—comprising sovereign AI, regional NeoClouds, and enterprises—will represent roughly half of its data center business.

Investors currently pay a premium for the stock, which trades at a price-to-earnings multiple of 28.3 and a price-to-sales multiple of 18.0, above the S&P 500 medians of 23.0 and 3.2, respectively, while sitting about 4% below its 52-week high. A primary business risk involves management's investment of nearly $50 billion in Frontier AI labs, raising questions about circular financing where NVIDIA funds customers who may later develop competing custom chips. For investors seeking alternative participation, a semiconductor ETF like SOXQ offers broader market exposure.