[redtehartykle]

I thought a valuation of a company on a stock market was a reflection of its potential future profits.

So with these recent influx of capital to me that's the market saying that it believes Nvidia and Apple are going to bring in profits in the future so here's money now to grow in order to capture those profits that come in later.

I'm probably misunderstanding aspects here though.

[itsoktocry]

>I'm probably misunderstanding aspects here though.

Yes, it's not as simple as "the company will make profits, therefore it's worth a lot".

Apple's expected forward p/e is ~28 over the next five years, which means if you believe that and buy now, you can expect an average return of 3.5%. How much you expect future earnings to grow determines if buying now is a good deal or not.

[joebob42]

That's the spherical cow view of how markets work, and it's a meaningful part of what actually happens, but there's also a good amount of hype / new cycle/ non "discounted value of future cash flow" going on in practice.