I used Google finance, but you can find out on all major financial websites. Market capitalisation is what the market thinks the company is worth, based on the current share price multiplied by the number of shares outstanding. Nvidia was/is worth $110bn in the eyes of the market.
I'll explain more later, but if you look at the balance sheet of the company, you'll find that the latest figure for equity in Nvidia is about $6bn. That's basically how much money you could get out of the company if you owned and sold it today (property, cash, etc). Things are a little more complicated when it comes to valuing patents and intellectual property, of which Nvidia will have quite a bit, but that's the basics.
So in buying shares currently, you're effectively paying $110bn for a $6bn company. This isn't the only metric on which to assess a stock's value, the P/E ratio is another (price to earnings). This is the share price, divided by the company's profit per share.
A very rough average P/E ratio for fairly priced companies in average market conditions (i.e. so not a strong bull/bear market) is 16. This means that theoretically, if profits could be realised, it would take you 16 years to earn your investment back. Another way of looking at it is that you're investing 16 dollars, for 1 dollar of earnings (profit)/year.
P/E is a broad measure, and tech stocks are often quite a bit higher than 16. Sometimes this is justified, sometimes not. A growing company with good prospects can be worth more. I haven't done extensive analysis on Nvidia, but a P/E ratio of 53 sounds very high, especially combined with the excessive price to book value (market cap vs equity).
Had a very quick look at your other firms, and AMD are losing money. Intel had a P/E of 14, which looks much better, but I'd have to delve in further to analyse, which I'll do later.
Very happy to help with any stock analysis, pointers and opinions
) is looking to purchase some shares, £500 or so each month, and asked me if I could recommend which online broker to use. I haven't a clue so thought I would ask here. Hes likely to keep hold of them rather than trading with the stocks if that makes any difference?
