{"id":52009,"date":"2023-08-23T11:52:01","date_gmt":"2023-08-23T15:52:01","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/the-history-of-companies-with-nvidia-like-valuations-isnt-a-good-one\/"},"modified":"2023-08-23T11:52:03","modified_gmt":"2023-08-23T15:52:03","slug":"the-history-of-companies-with-nvidia-like-valuations-isnt-a-good-one","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=52009","title":{"rendered":"The history of companies with Nvidia-like valuations isn\u2019t a good one"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002421169\" role=\"document\">\n<p>There will be two major drivers of market sentiment this week \u2014 the gathering of Federal Reserve officials in Jackson Hole, Wyo., and Nvidia\u2019s set of results \u2014 although there could be some fireworks from the Labor Department\u2019s preliminary benchmark revision to the jobs data on Wednesday.<\/p>\n<p><strong>Related: <\/strong>Expectations for Nvidia\u2019s earnings are massive. Will they even matter?<\/p>\n<div class=\"paywall\">\n<p>Jeremy Schwartz, global chief investment officer at WisdomTree, decided to take a look at Nvidia<br \/>\n        NVDA,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/200467500\/composite\" class=\"positive\">+2.14%<\/bg-quote><span>,<\/span><br \/>\n       whose stock has rocketed 196% this year on demand for chips that can process artificial-intelligence-related requests. On a price-to-projected sales ratio, Nvidia stands at a lofty 25, and an even steeper 40 when looking at the trailing 12 months, he says.<\/p>\n<p>Nvidia now holds the distinction of having the highest price-to-sales ratio in the S&amp;P 500, a title 99 companies have had since the 1960s. Tech stocks perhaps not surprisingly represent 27% of that group. <\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Over the next year, the average price-to-sales champion has seen its stock rise 12% on average, outperforming the broader market\u2019s 11% rise; but over the next three years, the average stock has dropped 4% annually, compared to the market\u2019s 9% rise, and over the next five years, it has fallen 2%, versus the market\u2019s 10% gain. Those figures are taken from a book written by famed investment author Jeremy Siegel with Schwartz\u2019s help.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>The underperformance is even starker for the tech companies that hold the biggest price-to-sales ratios. And the median performance for stocks at these price-to-sales ratios is even worse.<\/p>\n<p>\u201cOur analysis suggests that an overemphasis on high P\/S stocks may falter in the long run, as it may prove difficult for these companies to sustain the rapid growth required to justify these valuations and continue their performance trajectory,\u201d says Schwartz.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/the-history-of-companies-with-nvidia-like-valuations-isnt-a-good-one-17f46efe?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There will be two major drivers of market sentiment this week \u2014 the gathering of Federal Reserve officials in Jackson Hole, Wyo., and Nvidia\u2019s set of results \u2014 although there could be some fireworks from the Labor Department\u2019s preliminary benchmark revision to the jobs data on Wednesday. Related: Expectations for Nvidia\u2019s earnings are massive. Will [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":52010,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-52009","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The history of companies with Nvidia-like valuations isn\u2019t a good one | iFintechWorld<\/title>\n<meta name=\"description\" content=\"There will be two major drivers of market sentiment this week \u2014 the gathering of Federal Reserve officials in Jackson Hole, Wyo., and Nvidia\u2019s set of\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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