Is this a sign that Nvidia stock has peaked?

Nvidia (NVDA 1.20%) it’s been the ultimate growth stock I’ve owned in years. Since 2021, its shares are up more than 700%. That would have been enough to turn a $15,000 investment in stocks back then into over $120,000 today. And although it has fallen in recent weeks, it is still among the most valuable companies in the world.

But there are always questions about its valuation and whether or not Nvidia is finally at a peak. The stock has been under pressure of late, even as the company reported another solid quarterly performance. Could this be a sign that he’s finally peaked?

When a beat just isn’t enough anymore

If a stock is trading at more than 50 times earnings, which has normally been the case for Nvidia, expectations will be high. After all, investors pay a premium for the business because it’s a growth machine and expects more than just revenue and profit growth. Nvidia skyrocketing valuations on expectations of even more than that – there’s got to be a solid beat and strong guidance.

The company did well last quarter, maybe it wasn’t good enough. Here’s how it fared in the most recent period, which ended July 28, compared to analysts’ expectations.

Data source: CNBC.

Nvidia beat expectations on all metrics, but the pace wasn’t as impressive as it was a quarter earlier. Here are Nvidia’s numbers for the period ending April 28.

Data source: CNBC. These results are before the 10-for-1 stock split that took place in June.

Last quarter was a slightly less impressive beat than what Nvidia delivered for the quarter ended in April, and that could be a big part of why investors aren’t as bullish on the stock as they have been in the past. While the business still looks solid, it may not be as impressive as before.

Is Nvidia responsible for the tech’s decline, or is it a victim of a broader sell-off?

Artificial intelligence (AI) stocks have fallen in recent months, with Nvidia’s losses slightly worse than average. Its shares have fallen more than 12% in the past three months, while ETF Robo Global Robotics and Automation Index and the ETF Global X Robotics & Artificial Intelligence both are down about 5% over that period. Nvidia is often a big component of many exchange-traded funds (ETFs) focused on technology and artificial intelligence, so if it does poorly, many top funds are likely to struggle as well.

But I don’t think Nvidia is responsible for the massive AI sales and tech stocks of late. Shares have soared to absurd prices, and with Nvidia’s valuation exceeding $3 trillion, making it one of the most expensive stocks in the world, it may have caused investors to start wondering how much longer the stock might have left . And the possibility of a recession looming amid disappointing jobs numbers is likely to put even more pressure on growth stocks these days.

Ultimately, I don’t think Nvidia’s earnings numbers gave investors much of a reason to sell the stock, but those that did were probably looking for any reason to collect And that could indeed be a sign that the stock may have finally peaked — at least in the short term.

Is it too late to buy Nvidia stock?

Nvidia stock may have peaked in the short term, but that doesn’t mean it can’t recover or rise in the future. Given its leadership in the AI ​​chip market and the brand it has built over the past few years, the stock should continue to become more valuable as economic conditions improve. But any time a stock gets so expensive, it’s worth investors thinking about why they’re paying such a premium for the business. Nvidia has effectively been priced to perfection and any sign of weakness could prompt a sell-off.

If you’re looking for an investment to hang onto for a few years, then no, it’s probably not too late to invest in Nvidia stock. But if you’re expecting some significant gains over the next year or two, then you might be disappointed by Nvidia. In that case, you’d be better off chasing growth stocks at more modest prices.