I have a PhD in AI, and over 2 decades working in AI or following AI closely, as well as similar length of time in experience with NVIDIA’s chips. What follows is my personal opinion. You should verify these claims for yourself:
NVIDIA are an awesome company. Their products, historically (and currently at the high-end) are really great.
They do not deserve a PER of over 200x. Their products at the low-end and mid-range are a joke, currently. In fact, they are still struggling to shift their 2020-era products, currently. They are significantly exposed to manufacturing risks in China/Taiwan.
NVIDIA has unfortunately been maximising its margins on products with the result that competition is muscling in (e.g. Intel moving into discrete GPUs and AI accelerators). Also, NVIDIA became a success by supplying GPUs to the gaming market, but in the last 5-10 years has begun to neglect them even though they are a significant source of revenue.
I encourage you to read up on the “AI winter”, this wouldn’t be the first time there has been a lot of hype around AI and money poured into it, followed by calamity, when ‘cool’ failed to turn into ‘reliable and practical’.
I believe anyone investing in NVIDIA at the $300-400 level this year will be burned about as badly in the medium term as those who invested in NVIDIA at the $300-400 level in 2021. (where the price subsequently dropped more than 60%)
As far as “AI chips” go, any chip can be an AI chip. Training requires more power, but ‘using’ AI requires very little. Indeed, your phone likely already has a significantly powerful AI accelerator in it that’s more than adequate for a wide range of tasks. NVIDIA’s advantage isn’t so much the chip tech. It’s the software that lets you transfer AI tasks onto the chips, and the competition are not far behind in that regard.
But, each to their own. All stocks have an element of valuation due to economics and an element of valuation due to sentiment and willingness to suspend disbelief. Prices are not determined by experts in the topic, but by the crowd.
Great company, but a crazy overpriced stock.
Oh, and one other point: they have used much of their earnings to do buybacks at these crazy prices, and I believe they then re-issue quite a lot of stock as grants to employees. So all that hard-earned shareholder wealth turns into … ? hmm.
Again; this is all my personal opinion, not financial advice, etc.