(CercleFinance.com) – Nvidia recorded one of the best performances of the S&P 500 index on Monday on the New York Stock Exchange, taking advantage of market optimism two days before the publication of its quarterly results.
Less than half an hour after the opening, the title of the designer of graphics chips climbed 4.5%, showing a capitalization of 1.100 billion dollars, while the S&P gained at the same time less than 0.4% .
The Californian group is due to publish its quarterly accounts on Wednesday evening after Wall Street closes, which will be one of the most anticipated meetings of this stock market week.
During its last quarterly publication, in May, Nvidia had reported particularly favorable prospects related to artificial intelligence, which had made its title soar by almost 50% in two months.
In a note released in the morning, analysts at Wedbush Securities said they expect the company to release a similarly optimistic outlook on Wednesday evening.
On the stock market, the action has more than doubled in value since the beginning of the year, a performance which is largely responsible for the strong 27% increase posted by the Nasdaq index this year.
Of the 38 analysts who follow the stock today, a large majority, that is to say 21, recommend it as a buy or a strong buy.
But some managers point to an increasingly stretched valuation, with a share price/enterprise value ratio of more than 40 based on sales over the past 12 months, which makes the stock the most expensive paid ever. current time on the S&P 500.
Based on historical examples of companies having already reached such high valuation levels, the odds of Nvidia continuing to outperform are bound to dwindle, they point out.
‘In the year after a stock reaches the top spot in terms of P/V ratio for the first time, these companies continue to outperform, beating the S&P 500 by 1.5% on average,’ argues Jeremy Schwartz, Chief Investment Officer at WisdomTree.
‘But their momentum faltered in the years that followed,’ he says.
‘Over the next three years their average annual return drops to -4.4%, and the average annual return over five years drops further to -1.5%’n concludes the specialist.
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