NVIDIA Corp. (NASDAQ:NVDA)

The valuation ratios exhibit a distinct cyclical pattern characterized by an aggressive expansion in multiples peaking between early 2023 and early 2024, followed by a sustained period of valuation compression leading into mid-2026.

Price to Earnings (P/E) and Price to Operating Profit (P/OP)

Both earnings-based ratios display highly correlated trajectories. A sharp escalation began in late 2022, with the P/E ratio peaking at 200.72 and the P/OP ratio reaching 213.98 by April 30, 2023. Subsequent to this peak, a consistent and significant downward trend is observed. By July 26, 2026, the P/E ratio declined to 26.20 and the P/OP ratio to 25.57. This suggests that earnings growth significantly outpaced stock price appreciation during the latter half of the analyzed period, leading to a substantial normalization of the earnings multiples.

Price to Sales (P/S)

The revenue multiple followed a trajectory similar to the earnings ratios but with less extreme volatility. The P/S ratio rose from 20.32 in May 2021 to a peak of 37.18 in April 2023. After maintaining a range between 27 and 35 through 2023 and early 2024, the ratio entered a period of decline, ending at 16.68 by July 26, 2026. This movement indicates a gradual realignment of the market valuation relative to the company's top-line revenue growth.

Price to Book Value (P/BV)

The P/BV ratio demonstrated a delayed peak relative to the other valuation metrics. While P/E and P/S peaked in early 2023, the P/BV ratio continued to climb, reaching its maximum of 57.48 on April 28, 2024. A subsequent contraction is evident, with the ratio falling to 22.07 by July 26, 2026. This suggests that the market's premium over the accounting book value peaked later than the premium over current earnings or sales.

Across all four metrics, the data reflects a transition from a period of extreme valuation premiums to a more conservative valuation regime. The convergence of all ratios toward their lower bounds by mid-2026 indicates a systemic compression of multiples, likely driven by the scale of financial growth relative to the stock price.

The financial trajectory from May 2021 through July 2026 is characterized by a dramatic expansion in both equity value and earnings, resulting in a significant shift in valuation multiples. While the share price exhibited substantial long-term growth, the price-to-earnings (P/E) ratio underwent a period of extreme volatility before entering a sustained downward trend, indicating that earnings growth eventually outpaced price appreciation.

Share Price and Earnings Per Share (EPS) Correlation

A strong positive correlation exists between the share price and EPS over the analyzed period. The share price rose from 15.70 US$ in May 2021 to 209.66 US$ by July 2026. This growth was mirrored by a substantial increase in EPS, which climbed from 0.21 US$ to 8.00 US$ in the same timeframe. Notably, the acceleration of EPS growth became most pronounced after April 2023, providing the fundamental support for the rising share price.

P/E Ratio Volatility and Speculative Peak

The P/E ratio experienced a period of instability between May 2021 and April 2023. After fluctuating between 48.55 and 97.36 in the first two years, the ratio surged to a peak of 200.72 in April 2023. This spike occurred as the share price began to rise sharply while EPS remained temporarily depressed at 0.19 US$, suggesting a period where market expectations for future growth significantly exceeded current financial performance.

Valuation Compression and Fundamental Alignment

Following the peak in April 2023, a consistent downward trend in the P/E ratio is observed, falling to 26.20 by July 2026. This compression occurred despite the share price continuing to increase. The decline in the multiple is attributed to the exponential growth in EPS, which rose from 0.19 US$ in April 2023 to 8.00 US$ in July 2026. This shift indicates a transition from a valuation driven by speculative anticipation to one supported by realized profitability.

In summary, the data reflects a transition from a high-multiple growth stock to a more fundamentally grounded valuation. The sharp reduction in the P/E ratio during the final three years of the period demonstrates that the company's ability to generate profit expanded more rapidly than the market's willingness to pay a premium for the stock.

The financial trajectory from May 2021 to July 2026 demonstrates a transition from volatile valuation multiples to a period of fundamental-driven compression. While the share price exhibited a strong long-term upward trend, the growth in operating profit per share accelerated significantly in the latter half of the period, fundamentally altering the Price to Operating Profit (P/OP) ratio.

Share Price and Operating Profit Correlation

A substantial increase in both share price and operating profit per share is observed over the analyzed timeframe. The share price rose from 15.70 in May 2021 to a peak of 223.47 in April 2026, eventually settling at 209.66. Parallel to this, operating profit per share grew from 0.22 to 8.20. The growth in operating profit exhibited a more aggressive acceleration starting in July 2023, which began to outpace the growth in market valuation.

P/OP Ratio Volatility and Peak Expansion

The P/OP ratio experienced a period of extreme expansion between January 2023 and April 2023, reaching a peak of 213.98. This spike occurred while operating profit per share was at its lowest levels (0.17 to 0.18), suggesting a temporary decoupling where the market price reflected future growth expectations rather than current operating performance.

Valuation Compression Trend

Following the peak in early 2023, a consistent and sustained downward trend in the P/OP ratio is evident. The ratio declined from 107.15 in July 2023 to 25.57 by July 2026. This compression indicates that the rapid escalation in operating profits has effectively "caught up" with the rising share price, resulting in a more conservative valuation multiple relative to the company's actual operational earnings.

The financial trajectory from May 2021 through July 2026 is characterized by an aggressive expansion in both share price and revenue per share, accompanied by significant fluctuations in the Price-to-Sales (P/S) ratio. While market valuation increased substantially, the rate of revenue growth eventually outpaced share price appreciation, leading to a compression of the valuation multiple in the final stages of the period.

Revenue and Share Price Dynamics

Sales per share demonstrated a consistent and strong upward trend, rising from 0.77 US$ in May 2021 to 12.57 US$ by July 2026. During the same timeframe, the share price experienced more volatility, climbing from 15.70 US$ to a peak of 223.47 US$ in April 2026, before settling at 209.66 US$.

Valuation Cycles and P/S Peaks

The P/S ratio moved through three distinct phases. The first phase saw a spike to 32.92 in October 2021, followed by a correction to a low of 12.64 in July 2022. The second phase was marked by a sharp increase in valuation, with the ratio peaking at 37.18 in April 2023 and remaining elevated above 30.00 through April 2024, reflecting a period of high market optimism relative to reported sales.

Long-term Valuation Compression

A sustained downward trend in the P/S ratio is observable from January 2024 through July 2026. Despite the share price reaching its highest levels, the P/S ratio declined steadily from 35.41 to 16.68. This trend indicates that the growth in sales per share became the primary driver of value, reducing the valuation multiple and suggesting a shift toward a more fundamentally supported share price.

The valuation trajectory exhibits three distinct phases: a period of initial volatility, a phase of aggressive expansion, and a subsequent period of valuation normalization.

Share Price Dynamics

The share price demonstrated a significant long-term upward trajectory, rising from 15.70 in May 2021 to a peak of 223.47 in April 2026. A period of rapid acceleration is evident between January 2024 and July 2024, during which the price climbed from 67.47 to 125.61, marking a sharp increase in market valuation.

Book Value per Share (BVPS) Evolution

BVPS maintained a consistent growth pattern over the analyzed period, increasing from 0.75 to 9.50. The rate of growth accelerated markedly starting in October 2023; the value rose from 1.35 to 9.50 by July 2026, indicating a substantial increase in the company's retained earnings and net asset base.

Price to Book Value (P/BV) Ratio Trends

The P/BV ratio experienced high volatility, reaching a peak of 57.48 in April 2024. Following this peak, a sustained contraction is observed, with the ratio declining to 22.07 by July 2026. This trend is particularly noteworthy as the ratio decreased while the share price continued to rise, confirming that the growth in book value per share occurred at a faster rate than the appreciation of the stock price during the final two years of the period.

The movement from a peak P/BV of 57.48 toward 22.07 suggests a transition in market pricing. The valuation shifted from a state of extreme premium—likely driven by high growth expectations—toward a more grounded valuation supported by the significant expansion of the company's tangible book value.