Nvidia's AI-Fueled Stock Surge Pushes Earnings Multiple Beyond Tesla's — Analyst Hails 'Best GPUs'

Nvidia’s AI-generated rally has pushed its earnings multiple above Tesla Inc‘s.

Nvidia Corp. NVDA shares have surged 180% this year alone, making it the top performer in the S&P 500. The company’s market value now surpasses $1 trillion, ranking it 5th among U.S. companies, following tech giants like Amazon, Apple, Microsoft, and Alphabet, CNBC reported.

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The value of Nvidia’s shares is driven by the company’s leading role in the development of artificial intelligence chips and software, which are in high demand across Silicon Valley. The company’s H100 chips, costing around $40,000 each, are being bought in large quantities by major players like Microsoft and OpenAI.

"Long story short, they have the best of the best GPUs," Piper Sandler analyst Harsh Kumar told the publication, who recommends buying the stock.

"And they have them today."

Despite the company’s recent success, its stock price has been subjected to high growth assumptions, including the expected doubling of sales in the coming quarters and an almost fourfold increase in net income this fiscal year. Nvidia’s price-to-earnings ratio currently stands at 220, a striking figure even when compared to high-valued tech companies like Amazon and Tesla.

Analysts expect Nvidia to report a quarterly revenue of $11.08 billion later this month, marking a 65% increase from the previous year.

"As investors, we have to start wondering if the excitement around all the great things that Nvidia has done and may continue to do is baked into this performance already," according to WisdomTree analyst Christopher Gannatti.

"High investor expectations is one of the toughest hurdles for companies to overcome."

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