Investors focused on backward-looking metrics likely missed out on Nvidia (NVDA), one of the most lucrative investment opportunities in the past decade.
Nvidia’s success underscores the importance of looking at forward expectations as opposed to backward-looking metrics. The price-to-earnings ratio is a popular valuation metric that provides insight framed in a historical context. To better assess the stock’s potential, investors needed to also assess its future profitability.
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