Do we realize how much the value of individual companies can change in a single night?
Nvidia sets Wall Street record
Approximately $277 billion more in market capitalization in one day: Chip company Nvidia has set a Wall Street record thanks to investors' AI euphoria. The semiconductor specialist's market value thus approached the two trillion dollar mark on Thursday. Nvidia had presented quarterly figures with strong gains the day before. Nvidia shares rose 16.4 percent to $785.38 on Thursday. The previous record was held by Facebook-owned Meta – with a gain of $197 billion in one day.
Source: ZDF News ticker from February 23, 2024
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Well, this “value” on the stock exchange is nothing tangible and actually only reflects people’s expectations and desires, tomorrow the “value” can fall again rapidly without having changed something at NVIDIA.
I understand. But I was not clear at all, in which Number such value fluctuations can occur.
It would be interesting to know whether the very successful, first commercially oriented landing on the moon, has influenced the value of the companies involved to a similar extent or perhaps will have tomorrow.
Well, the market value changes every second. However, it is necessary to delimit the value of the company resulting from equity, profit and other parameters. That many investors hide the market risk is an open secret.
Nvidia is undoubtedly a well-run company with solid numbers and shiny prospects. But even in comparison to the very good figures the company provides, the stock seems to be somewhat overvalued at the moment. That there will be a correction in the near future is very likely. It’s just the question when exactly that happens and how violent it is. If the correction is very strong, very many (small) investors will flee with loss from the stock and it could temporarily result in a pronounced underevaluation.
In order to invest in Nvidia, it might be worth waiting for the price correction first and then, if the fundamental business figures are unchanged, to get at a lower price. Prior to the decision, however, one should try to include information on the general market conditions and a comparison with similar companies in order to better understand the position of Nvidia in the context of the entire market.
With a KGV of 26 and an estimated profit growth of 35% per year to the next 5 years, NVIDIA is even slightly undervalued.
I don’t know if you’re aware of that.