Nvidia this week briefly became the largest United States (US) company by market value on the back of a more than 1 000% surge in share price since October 2022. It is up 206% in the last 12 months.

Nvidia bulls say more gains are coming. The Santa Clara, California company stands at the forefront of a massive technological shift as the dominant provider of chips to support artificial intelligence applications.

Revenues are expected to double this fiscal year to $120 billion and rise to $160 billion in the following year. Microsoft, by comparison, is expected to grow revenues by about 16% for its fiscal year.

The stock’s eye-popping performance is drawing in investors afraid of missing out on more gains. Yet it has also made Nvidia’s shares more richly valued, its forward price-to-earnings ratio, for example, has grown by 80% this year. That could make the company’s shares more vulnerable to sharp pullbacks when bad news hits.

"What it's done in the past, shouldn't be driving the investment decision," said Chuck Carlson, Chief Executive Officer at Horizon Investment Services.

"However, on a stock like Nvidia, it's awfully hard to have that not be a factor in the investment decision because you have this chasing feeling."

--Reuters--