In the current session, NVIDIA Inc. NVDA is trading at $200.03, after a 0.49% increase. Over the past month, the stock increased by 10.14%, and in the past year, by 62.14%. With performance like this, long-term shareholders are optimistic but others are more likely to look into the price-to-earnings ratio to see if the stock might be overvalued.

Assuming that all other factors are held constant, this could present itself as an opportunity for shareholders trying to capitalize on the higher share price. The stock is currently below from its 52 week high by 4.18%.

The P/E ratio is used by long-term shareholders to assess the company's market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E can either represent a company's poor future earnings potential or a buying opportunity relative to other stocks. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

Most often, an industry will prevail in a particular phase of a business cycle, than other industries.

NVIDIA Inc. has a better P/E ratio of 94.11 than the aggregate P/E ratio of 49.59 of the Semiconductors & Semiconductor Equipment industry. Ideally, one might believe that NVIDIA Inc. might perform better in the future than it's industry group, but it's probable that the stock is overvalued.

There are many limitations to P/E ratio. It is sometimes difficult to determine the nature of the earnings makeup of a company. Shareholders might not get what they're looking for, from trailing earnings.