Nvidia (NASDAQ: NVDA) has emerged as a dominant force in the 2023 stock market, riding the wave of the tech revolution led by artificial intelligence (AI).
With its stock soaring to an unprecedented high of over $505 last month, the chipmaker boasts a year-to-date surge of almost 250%, solidifying its position as the best-performing S&P 500 stock.
Despite its share price witnessing a more than threefold surge, NVDA remains the most attractively priced stock among the Big Tech names, based on a widely used valuation metric.
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How NVDA became the cheapest stock after a threefold increase?
Barchart, a platform providing real-time stock and commodities data, said in its December 17 post that NVDA is the cheapest stock among Magnificent Seven companies – the largest tech giants including Apple, Tesla, Microsoft, Alphabet, Amazon, Meta Platforms, and Nvidia itself.
This call is based on the price-to-earnings growth (PEG) ratio. This refers to a financial metric that assesses a stock’s valuation by comparing its price-to-earnings ratio (P/E) to its expected earnings growth rate. In other words, it provides insight into whether a stock is overvalued or undervalued relative to its projected earnings growth.
Contingent on calendar year 2024 earnings per share (EPS) estimates and projected EPS growth from 2023 to 2026, NVDA has the lowest PEG ratio, making it the most undervalued stock among the seven juggernauts.
META, AMZN and GOOGL have a slightly higher PEG ratio than NVDA, meaning they also offer decent value for investors. The top three most overvalued Magnificent Seven stocks are AAPL, TSLA, and MSFT, with the former having a particularly high PEG value.
Intriguingly, none of these stocks have seen gains similar to NVDA in 2023, apart from Meta Platforms which surged 175% year-to-date. The remaining five companies each witnessed double-digit returns this year.
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