Last month, Nvidia (NASDAQ: NVDA) became the first company to be valued at more than $4 trillion, as artificial intelligence (AI) has become the future of technology. The stock is trading a tiny bit under its recent record high on Thursday morning, and investors may be wondering if the stock is too expensive to buy. A look at how Nvidia became the AI leader might give investors more comfort in buying shares now.
Nvidia stock does look relatively expensive right now. Its price-to-sales (P/S) ratio based on expected 2025 revenue is about 21.5. That’s above its three-year average of 18.5, which itself is very high. But an elevated P/S valuation has thus far proven justified. That’s because sales have soared exponentially, led by Nvidia’s data center segment.
Nvidia’s stock price has risen along with those sales, and there looks to be more room to run for both. Data center sales continue to increase every quarter, and the company’s next-generation graphics processing unit (GPU) Rubin architecture is slated for release in 2026.
Nvidia has growth potential beyond data centers, too. Revenue from its automotive and robotics segment is also growing quickly, as shown below. It could have a longer runway for growth, too.
Companies around the world are working to make driverless cars a reality. There could be a massive market for self-driving ridesharing and taxi services. Nvidia is partnering with legacy automakers as well as start-ups like autonomous driving company Nuro to advance AI-driven autonomous vehicles.
Beyond automotive applications, robotics could also become a large market as companies seek more efficient and safer ways to operate. Nvidia’s future looks bright. The stock may look expensive now, but that can quickly change as the business soars.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
-
Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $465,314!*
-
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $40,483!*
-
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $635,544!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of August 4, 2025
Howard Smith has positions in Nvidia and has the following options: short October 2025 $160 calls on Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Think Nvidia Stock Is Expensive? These 2 Charts Might Change Your Mind. was originally published by The Motley Fool