After $2trn gain, Nvidia is still irresistible to many

Its business is massive, its profits are booming and everyone already knows Nvidia Corp is the hottest stock on Wall Street.

Its rapid growth in that space has transformed Nvidia from a niche maker of graphics processing units used for gaming to the third-most valuable company in the world. It is now worth nearly $3 trillion, having added more than $2 trillion of that since a landmark earnings report sent its stock into the stratosphere last year.

“The only thing stopping them from selling any more is supply,” said Michael Kirkbride, partner and portfolio manager at Evercore Wealth Management. “When narratives get ahead of themselves is when they extrapolate recent trends into the future,” Arnott, founder and chairman of Research Affiliates LLC, said in an interview. “Nvidia’s sales doubled in 12 months. Fantastic. How long does that persist?” ADVERTISEMENT CONTINUE READING BELOW Others express a mixture of worry and surprise at Nvidia’s success, but say they cannot help but be buyers of the stock.

Importantly, Nvidia is not just growing profits but profit margins, showing its pricing power as revenue shoots higher. Analysts expect Nvidia’s gross margin — the percentage of revenue that remains after production costs — to rise to 76% this fiscal year, up from 59% two years ago. “For a similar valuation, you’re getting so much greater growth with Nvidia,” he said. “There’s no competition for that kind of fundamental growth in a megacap company.”

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