To The Moon

• Many investors consider Nvidia $NVIDIA Corp(NVDA)$ expensive based on its PE ratio of 67x, which is the second highest among the Magnificent Seven.

• They may prefer other Magnificent Seven stocks that have relatively lower PE ratios, such as Apple $Apple(AAPL)$ at 30x, Amazon $Amazon.com(AMZN)$ at 48x, Alphabet $Alphabet(GOOG)$ at 26x, Meta Platforms $Meta Platforms, Inc.(META)$ at 25x, and Microsoft at 36x.

Source: Bloomberg, Tiger Brokers

• However, Nvidia’s premium valuation is justified because it is providing high revenue and earnings growth that is unmatched by other Magnificent Seven stocks.

• Nvidia has consistently shown triple-digit revenue year-over-year growth over the last four quarters, with an average operating income YoY growth of 1,142%. Additionally, its operating profit margin is the highest among the Magnificent Seven stocks at 64.92%, whereas the remaining stocks average a 27% operating profit margin.

• For example, even though Apple's PE ratio is relatively cheap at 30x compared to Nvidia’s 67x, Nvidia provides much better growth. This is evident with its 262% YoY revenue growth, 690% operating income YoY growth, and 65% operating profit margin. In comparison, Apple has -4% YoY revenue growth, -1% operating income YoY growth, and a 31% operating profit margin.

• In conclusion, Nvidia investors are willing to pay a premium valuation for its growth potential.

Source: Bloomberg, Tiger Brokers

Source: Bloomberg, Tiger Brokers