Cathie Wood Calls Nvidia Stock Overpriced. We Think It Really Is, Given Astronomical Valuations

Building on its meteoric rise, shares of Nvidia (NVDA) rose another 3.5% in today’s, May 31, premarket trading, having topped $400 earlier this week. If the stock market darling continues to ride the wave of investor enthusiasm for artificial intelligence, it would also give the company a valuation of more than $1 trillion, which it has already briefly touched.

Meanwhile, the AI leader and chipmaker giant has been aspiring at giving tons of press releases and commentaries since last week. These include numerous products and services related to artificial intelligence, such as an AI supercomputer platform called DGX GH200. Google (GOOGL), Meta (META) and Microsoft (MSFT) are expected to be the first major clients that could help them create a successor to ChatGPT.

Several other chipmakers rallied as Nvidia (NVDA) hit a $1 trillion market cap, including Broadcom (AVGO ), Qualcomm (QCOM ) and AMD (AMD ), which were all up 2% or more in premarket trading.

Speaking about the ongoing meteoric rise of Nvidia, there is one big pitfall. According to NVIDIA's latest financial reports and stock price, the company's current price-to-earnings ratio (TTM) is almost 230. At the end of 2021 the company had a P/E ratio of 89.2.

In this respect, according to Finance.Yahoo, the founder of Ark Invest tech innovation investor Cathy Wood noted that the AI darling is now overpriced.

“Since 2014, ARKInvest has believed that Nvidia saw the AI future before most other chip companies, and now we believe it will continue to power the AI age. At 25X expected revenue for this year, however, $NVDA is priced ahead of the curve,” Wood tweeted.