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Antonio Di Giacomo, Senior Market Analyst at XS.com, writes:

Nvidia has established itself as one of the most extraordinary growth companies in the global technology sector. Over the past two fiscal years, its revenues have risen from levels close to $60 billion annually to well above $120 billion, driven by the explosive demand for chips used in artificial intelligence, data centers, and accelerated computing, transforming its financial profile in an exceptionally short period.

This progress is reflected not only in sales but also in profitability. Nvidia has reported gross margins above 70% and operating margins close to 60%, figures far exceeding the semiconductor industry average, which typically ranges between 20% and 30%. In terms of returns, ROE remains above 70%, and ROA exceeds 35%, metrics more typical of software companies than hardware manufacturers. This performance has led to a sharp revaluation in the stock market. The shares have gained several hundred percent over three years, pushing the market capitalization above $3 trillion. As a result, valuation multiples have expanded significantly, with a P/E ratio remaining above 40 times forward earnings, compared with a sector average of around 20 times.

The PEG multiple also reflects demanding expectations. In many scenarios, it exceeds 1.5, suggesting the market is pricing in earnings growth of 30%-40% annually for several consecutive years. This leaves little room for error, as any slowdown could trigg......................

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