Comment by jonfromsf
10 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.