One of the immense stories of stock exchange technologies from recent years was the amazing development Nvidia (NASDAQ: NVDA). Only over the past five years Nvidia shares have increased 1 410%.

How long did it take to transform investments worth 1000 GBP into a 10,000 GBP holding?

Stunning boost in stock price

The answer is about two and a half years.

NVIDIA shares ended in 2022 for less than one tenth of the current price. So 1,000 pounds invested in NVIDIA shares would now be worth over 10,000 pounds.

This happens before the dividends are taken into account. To say, the current performance of 0.03% is not exactly what dreams of passive income! Buying shares at the end of 2022 would mean a capacity 10 times higher than 0.03% today – but still much below 1%.

In this example, I ignored the impact of foreign exchange rates to simplify the situation. In fact, however, such changes are a risk of purchasing American shares as a British investor. Sometimes they can reduce the overall return on investment. But it can also happen the opposite: it depends on how (if at all) the exchange rate moves during the life of the shareholder.

Nvidia looks like a great business, but it can be even better

Even after these good results, NVIDIA shares are now selling for about 51 -earnings.

This is too high for my taste, which is why I have no plans to add a company to my portfolio. Despite this, it is very striking that the price -profit ratio is not even higher, considering how perfectly NVIDIA shares in recent years.

It reflects the fact that while the price of the shares increased, they also have earnings.

For example, last year, Nvidia reported a basic profit per share of USD 2.97. In 2022, the equivalent number was 0.18 USD.

So, although the price of the shares increased, it actually increased less quickly at this time than earnings, which means that NVIDIA shares are probably cheaper than in 2022.

Can this type of success continue?

Nvidia has a proven and very profitable business model. It has many reserved system projects, as well as a immense existing customer base. In the context of developing demand for chip needs AI, this may mean that the company is still growing at speed. This month, NVIDIA has reached the highest level-but if the company stands out well, I think it can go even higher.

Why I’m waiting

However, although I see reasons to feel stubborn in terms of perspectives, the current price of the action does not offer me a safety margin that I am looking for while investing.

Finally, a recent powerful demand for chip-titled AI may be the beginning of larger things that may come-but it may turn out to be a one-time blow before the demand drops to lower levels again.

Nvidia has many properties, but rivals work very demanding to steal their march on the sale of tokens. International commercial disputes can also make NVIDIA to stay in some markets.