Am I too late to buy Nvidia shares?

I have a confession to make: I don’t own one Nvidia (LSE: NVDA) shares. In my defense, I am British.

I caught plenty FTSE 100 shares directly, but only invest in the US with trackers. This is one of the reasons why I don’t hold Nvidia, but there is another one that is more important.

When the AI ​​producer band started rolling last summer – I mean, really rolling – I decided I had missed my chance. Nvidia’s share price has been going through the roof and I thought: it won’t continue like that.

It’s my usual response to a red-hot momentum stock. I’m afraid to jump on the board as the wheels come off. As a result, I missed out on a lot of excitement from Nvidia, Tesla, Amazon and the like.

I need to stop worrying and buy growth stocks

It’s time for me to rethink my attitude toward growth stocks. But I keep banging my head against the wall with the same question, mostly. Did I leave it too late?

Nvidia shares are up 165% in the past year. In five years, they increased by 2,195%. The company has a market capitalization of $3.3trn. It will not continue to grow at the same rate, it can swallow the entire world economy.

Then there is its measurement. The stock now has a price-to-earnings ratio of 55.1. That is very expensive.

In comparison, the S&P 500IP/E is around 33 times (and many investors think that’s expensive). Yet Nvidia’s earnings continue to rise. They jumped 94% year-on-year in Q3 to $35.1bn. Suddenly, Nvidia doesn’t look so expensive. The forward IP/E is just 30 times earnings.

The main attraction is that Nvidia is not investing heavily in building AI infrastructure. It leaves that to others. It doesn’t even manufacture its own high-performance graphics processing units (GPUs). That is provided by third parties such as Taiwan Semiconductor Manufacturing Company again Samsung.

I’m late to the party but I’ll go anyway

This makes it a bright business. On the other hand, it brings geopolitical risk. What happens if China invades Taiwan? And there are potential supply chain issues, if these manufacturers can’t keep up with demand. US President-elect Donald Trump’s reduced trade tariffs could also cause disruption.

Nvidia must also continue to innovate to maintain its leadership in GPU and AI chip technology. And there is a fundamental danger of AI hype being overdone.

Shares fell more than 6% on Tuesday (7 January) amid a broad technical sell-off triggered by a rise in US government bond yields. That wiped $220bn off its market value. I’m struggling to wrap my head around that amount. So this is my chance to buy?

The 50 analysts providing one-year price forecasts for Nvidia’s stock have generated an average target of $174.6. If correct, that’s about a 24% increase from today. That’s good, but it also shows that expected growth is slowing.

I left it sadly too late to buy Nvidia. Better late than never. I can circle another dip, but who knows if we’ll get it? So I will play it safe by investing a small amount and if the share price goes down, I will buy more.