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The A.I.-driven run in Nvidia’s stock this year has lifted its valuation to an eye-watering level that bodes poorly for its future based on the patterns of other shares that reached such heights. At above 36 times sales, Nvidia’s shares are trading at their highest valuation ever, according to Trivariate Research. Adam Parker’s research firm looked at all the other times in market history when stocks traded above a 36 price-to-sales ratio and what happened next. Six months later, the stocks kept pace with the S & P 500, but beyond that things take a turn for the worse with the shares starting to underperform materially. The stocks, on average, trailed the market by 25% and were down 10% in absolute terms in the subsequent 24 to 30 months, Trivariate found. When Nvidia joined the trillion dollar market cap club briefly last week, it was clearly based on anticipation of a future A.I. revenue windfall. Annual revenue for Nvidia last year was $26.9 billion. For the four other members of the elite club, annual sales are a minimum of about $200 billion. To be clear, Parker and his firm are not advocating shorting Nvidia’s stock any time soon. They were just passing on the historical data to clients. Nvidia “is anything but average,” wrote Parker. “We continue to think it is possible Nvidia could be a $2 trillion market cap. company in 2-5 years – so tactically shorting it based on a potential Q4 demand slowdown seems risky at best.” Still, the eye-popping valuation should give investors looking to buy Nvidia at these levels some pause. If the A.I. hype does become reality and if Nvidia does become the biggest chip player in the space, then it will be justified. But those are still two decent-sized ifs with the technology at such an early stage. —With reporting by Michael Bloom