Valuation Dispute — Is a Market Cap of $5.5 Trillion Too Expensive?

A P/E ratio of 45, is it expensive for a company growing 50% annually?

NVIDIA's market cap surpasses $5.5 trillion, with a static P/E ratio of about 45, and a forward P/E (2026 expected EPS around $18.5) of approximately 12.3 — this figure is even considered cheap among growth stocks. Why? Because NVIDIA's profit growth far exceeds its stock price appreciation.

In fiscal year 2024, NVIDIA's full-year EPS is $9.8, jumping to $15.2 in fiscal year 2025, and Wall Street expects it to be between $18 and $20 in fiscal year 2026. That means the stock price rises from $140 at the end of 2024 to $180 at the end of 2025, and then to the current $227, while the PE ratio actually drops from about 14 to around 12. This is a rare state of "growth digestion valuation."

Using PEG (Price/Earnings to Growth ratio), NVIDIA's PEG is about 0.4–0.6 (assuming a future three-year earnings compound growth rate of 30–40%), well below the reasonable range of 1. In comparison, many SaaS companies have PEGs over 2. So from a pure valuation perspective, NVIDIA is not only not expensive, but may also be one of the most cost-effective among U.S. tech giants.

Of course, the risk lies in growth slowdown. The market worries about AMD and dedicated ASICs (like Broadcom, Marvell) eating into market share, as well as large-scale customers developing their own chips. But in the short term, the moat of the CUDA ecosystem and network interconnects (InfiniBand, Spectrum-X) remains very deep. Customer-developed chips are mostly used in specific inference scenarios; training and complex inference still rely on NVIDIA.

Therefore, I believe there will be no valuation correction decline within May. On the contrary, as more long-term investors realize the logic of "growth digestion valuation," the stock price is expected to steadily rise between $220 and $240. On Polymarket, I would choose the $230–$240 range.