Now what
With NVIDIA now trading around 9.4 times trailing-12-month sales and 47 times earnings, investors are betting that NVIDIA can keep up its rapid growth rate. The big opportunity for NVIDIA is artificial intelligence (AI), which will require processing power that NVIDIA's graphics cards are well suited to provide. An analyst estimated in November that AI represents a $15 billion opportunity for chip companies, noting that NVIDIA is in prime position to benefit.
Whether NVIDIA can continue to grow so quickly, particularly its gaming business, which will face new competition from AMD 's Vega graphics cards next year, is an open question. The growth opportunities in automotive and AI acceleration could be huge, but the stock may already be pricing them in. NVIDIA will need to deliver incredible growth in order to keep investors happy. Anything less could lead to a lackluster 2017 for the stock.
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Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
