Counterintuitively, NVIDIA's P/E multiple has compressed even as its stock soared 15x. Earnings growth has been so explosive that it has outpaced the stock's appreciation, making NVIDIA trade at its cheapest valuation multiple in a decade.

In the current AI boom, companies are raising subsequent funding rounds at the same high revenue multiples as previous ones, months apart. This is because growth rates aren't decelerating as expected, challenging the wisdom that valuation multiples must compress as revenue scales.

After six months of trading flat, NVIDIA's valuation has become "crazy cheap" at ~14x forward estimates for a company growing over 50%. While competition is increasing, its current price presents an attractive entry point for long-term investors.

Despite massive growth, Nvidia's stock trades at a modest 24x earnings multiple, implying the market is pricing in a 'peak year' scenario. In contrast, AI ecosystem partners like AMD and Broadcom have higher multiples, suggesting greater investor confidence in the long-term AI cycle itself.

The market struggles to price exponential growth, creating opportunities to buy dominant tech companies at low forward earnings multiples (e.g., Nvidia at 4x). An understanding of S-curve adoption reveals this underappreciated earnings power before the market catches on.

NVIDIA's revenue growth is speeding up even as its revenue base expands massively, a rare feat that defies the "law of large numbers." This suggests strong network effects and a dominant market position are creating a self-reinforcing cycle of demand for its AI hardware.

Despite its massive market cap, NVIDIA trades at a forward P/E of 19, below the S&P 500 average. Tae Kim argues this is due to misplaced skepticism about a "peak," comparing it to Apple's single-digit P/E during its iPhone growth era, suggesting a major stock re-rate is possible through buybacks.

The Holt valuation framework, which prioritizes cash-based returns, indicates Nvidia could be worth 400% more. Unlike most high-growth companies whose projected earnings are 'faded' over time in the model, Nvidia's performance is so strong that even after applying a significant fade, it still appears dramatically undervalued.

Despite beating every financial metric and raising guidance, NVIDIA's stock didn't move. This signals that investor expectations are so inflated that even massive success is already priced in. The first hint of slowing growth could trigger a significant correction, as the market now demands perfection.