Few companies may lose 1 -USD in market capitalization. Nvidia (Nasdaq: NVDA), but it is still the second largest company on the American stock market.

On Tuesday (March 11), 29% fell compared to the January record according to the Market Square (March 11). It is worse than Nasdaq, which fell by 13% in three weeks.

Cheap chip manufacturer?

The profit of 1665% Nvidia has been stunning over the past five years. But despite this, the valuation still did not approach the height of some developing technological stocks from the past.

After this decline, the forecasts have NVIDIA shares in relation to the future price rate (P/E) of 25 in the budget year in 2025–26. For a year, an boost in earnings would lower it to less than 20.

In this result, NVIDIA looks better than the Grand Master of Growth in Great Britain, Rolls-Royce HoldingsWith the P/E forecast amounting to 31 and irrelevant to underestimate the Rolls-Royce perspective, I think that the global demand for AI can easily surpass air engines in the upcoming decades.

Early Mover’s defect

Nvidia sees a huge demand for its tokens during grave energy shortages needed for today’s growth of the data center. This means that it can call its price and safe and sound margins of profit.

But when I think that the price of the shares increased rapidly due to imbalances between pads and demand, I get a little nervous. History tells us that the markets are very good, they equalize the imbalance. The rest of the world chip producers are racing to catch up.

Are great server programmers to exploit your capacity best? Did they put in because they can’t take the risk of leaving behind? Will the winners be those that successfully replace the volume with performance? I think it’s partial for everyone.

I don’t know who will conduct AI Chip in 10 or 20 years. But I expect the competition to be more fierce and margins may be much lower. Buying an early applicant in days after the first phase of growth can sometimes be a bad move.

How much growth

Even after Nvidia’s success, he has still broken his estimates in his report in the fourth quarter last month. Revenues increased by 78% year -on -year, and profit per share (EPS) increased by 82%.

At that time, the general director of Jensen Huang described the demand for Blackwell chips as amazing. He said “AI is developing at the speed of light, when agent artificial intelligence and physical artificial intelligence prepares the stage of the next AI wave to revolutionize the largest industries“.

But all this high optimism reminds me of an ancient dot bubble. Everyone thought the internet would advance at the speed of lightweight and were right. But most did not really know, as many early removals are forgotten names today.

If it does well, Nvidia can happen Amazon AI revolution. But even Amazon crashed 90%when the first wave collapsed, then returned to become a long -term multibagter. Despite this, the modest valuation of P/E Nvidia means that I think that all possible further losses will probably not be so bad.