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To compare NVIDIA’s valuation, first fix the date and share price, then compare like-for-like earnings and revenue measures. The price-to-earnings ratio (P/E) relates share price to earnings per share; price-to-sales (P/S) relates it to sales per share. Neither multiple, by itself, establishes whether the stock is cheap or expensive. NVIDIA’s reported growth provides context, but historical results do not determine future growth or today’s valuation.
What P/E and price-to-sales measure
At the per-share level, P/E is share price divided by earnings per share (EPS). P/S is share price divided by sales, or revenue, per share. At the company level, the equivalent calculations use market capitalization divided by earnings or revenue for a specified period.
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Both ratios need a clearly stated measurement period and accounting basis. A trailing multiple uses results already reported; a forward multiple uses estimates. For P/E, specify whether earnings are GAAP or non-GAAP. Changing the share-price date, period, or accounting basis changes what the number represents.
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- P/E: shows the price investors pay relative to each dollar of earnings. Because earnings reflect margins, expenses, and other costs, changes in those factors can affect the ratio.
- P/S: shows the price investors pay relative to each dollar of revenue. It avoids using earnings as the denominator, but does not show how much revenue becomes profit.
These measures answer different questions; one cannot be substituted for the other without losing information.
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What NVIDIA’s reported growth can—and cannot—tell you
NVIDIA reported fiscal 2026 revenue of $215.9 billion, up 65% year over year, and diluted EPS of $4.90, up 67%. The company attributed the growth to continued momentum in accelerated computing and AI. Those figures and the explanation are from NVIDIA’s fiscal 2026 results.
For the quarter ended July 26, 2026, NVIDIA reported fiscal Q2 2027 revenue of $96.2 billion, up 106% year over year. It reported diluted EPS of $2.46 on a GAAP basis and $2.22 on a non-GAAP basis. The quarter’s growth rate is not directly interchangeable with the full-year fiscal 2026 rate: they cover different periods. NVIDIA described strong demand drivers in its Q2 2027 results release.
These are historical reported results, not a forecast, a trailing-twelve-month total, or a live valuation multiple. Growth may help explain why investors assign a particular price, but it does not prove that growth will continue at the same pace or that a given share price is justified. NVIDIA CEO Jensen Huang characterized the opportunity in the August 26, 2026 release: “AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue.” That is management’s view of the market and opportunity, not independent evidence of future results.
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- Choose a valuation date and share price. Record the date and the source of the quote. A multiple without a dated price is not a current valuation.
- Choose the denominator and period. Decide whether you are using trailing or forward earnings or revenue. Keep the comparison period consistent across companies or time periods.
- State the accounting basis for earnings. NVIDIA’s fiscal Q2 2027 release reports both GAAP diluted EPS ($2.46) and non-GAAP diluted EPS ($2.22). Do not use one while labeling it as the other.
- Read P/E and P/S together with profitability. P/E reflects earnings after costs; P/S does not reveal the share of revenue that becomes profit. Consider whether earnings and margins support the valuation rather than treating revenue growth alone as sufficient.
- Match growth periods before drawing comparisons. Label fiscal-year growth separately from quarterly year-over-year growth, and distinguish reported growth from estimates or forecasts.
- Consider business risk alongside the ratios. NVIDIA’s filing warns that risks to its business, financial condition, or results could harm the company and cause its stock price to decline. Multiples describe a price relative to a financial measure; they do not guarantee an investment return.
Can these figures say whether NVIDIA is overvalued?
Not on their own. A conclusion about whether NVIDIA is overvalued requires a dated market price, a defined trailing or forward denominator, and a reasoned basis for judging expected future performance and risk. The reported fiscal 2026 and fiscal Q2 2027 results show substantial historical growth, but they do not establish a current P/E or P/S ratio, a consensus growth forecast, or an objectively fair share price.
For an apples-to-apples assessment, calculate each multiple from the same dated share price and clearly identified financial period. Then evaluate what assumptions about future earnings, revenue, margins, and risk would need to hold for that price to make sense.
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