I agree risk also comes into it – it’s not a risk-neutral expected value (I discuss that in the final section of the OP).
Interesting suggestion that the Big 5 are riskier than Nvidia. I think that’s not how the market sees it – the big 5 have lower price & earnings volatility and lower beta. Historically chips have been very cyclical. The market also seems to think there’s a significant chance Nvidia loses market share to TPUs or AMD. I think the main reason Nvidia has a higher PE ratio is due its earnings growth.
I agree risk also comes into it – it’s not a risk-neutral expected value (I discuss that in the final section of the OP).
Interesting suggestion that the Big 5 are riskier than Nvidia. I think that’s not how the market sees it – the big 5 have lower price & earnings volatility and lower beta. Historically chips have been very cyclical. The market also seems to think there’s a significant chance Nvidia loses market share to TPUs or AMD. I think the main reason Nvidia has a higher PE ratio is due its earnings growth.