Comment by jonfromsf
6 months ago
If you compare the forward PE ratio to the regular PE ratio on most of these stocks you will see their profits are growing extremely fast. NVDA has a trailing PE of 55 but a forward PE of 32. TSM has PE of 33 but a forward of 23! A business growing profitability that fast is going to be valued at a premium.
But, when buying those stocks, you're paying for perfect execution. If profit growth doesn't meet expectations, there's a lot of room for the valuation (and the stock price) to fall.