When it comes to artificial intelligence (AI) stocks, few outshine Nvidia (NVDA 3.62%). Its chips play a near-dominant role in supporting AI, and to that end, the stock has risen more than 210% since the beginning of the year.

But the gains led to the inevitable question of whether its increases can continue. Hence, investors should take a closer look at where the stock now stands, evaluating whether opportunity remains in the AI stock or investors are too late.

The state of Nvidia today

Certainly, the recent gains have transformed the stock on some levels. Its market cap has nearly reached $1.2 trillion, making it one of the world's largest tech stocks.

Additionally, AI stocks have generally performed well since the beginning of the year. And with a market share of over 90% in the AI chip market, according to a Citi analyst, Nvidia plays an essential role in deploying that technology.

Advanced Micro Devices, its main rival in AI chips, just released its MI300x AI chip. But if and how much it can displace Nvidia's business is unclear.

But can investors still profit?

Unfortunately for prospective investors, capitalizing on the opportunity could prove difficult. The aforementioned run-up in the stock price has taken its trailing price-to-earnings (P/E) ratio of 236. Even when measuring by anticipated future earnings, the forward P/E ratio of 57 shows this is not a cheap stock.

Market sentiment may have improved compared with last year's bear market. Nonetheless, with analysts debating whether the market has entered a bull phase, investors may balk at that valuation.

The stock also appears to set investors up for disappointment in other ways. In its earnings report for the first quarter of fiscal 2024 (ended April 30), its revenue of just over $7 billion fell 13% versus the same quarter last year.

In contrast, generally accepted accounting principles (GAAP) net income grew 26% to just over $2 billion during that time. This occurred because Nvidia paid an acquisition termination cost of nearly $1.4 billion in the year-ago quarter. If excluding such one-time occurrences, Nvidia's net income dropped 21% on a non-GAAP basis.

Despite those numbers, the stock rose 24% in the next day's trading session, primarily on a fiscal Q2 revenue forecast of $11 billion. If that prediction holds, it will mean a 65% increase over one year.

However, that optimism and the recent run-up in the stock price may have priced Nvidia for perfection. If the fiscal Q2 earnings report, which comes out on August 23, even mildly disappoints investors, the stock could easily give back some of its recent gains.

Trading Nvidia stock

Given the current state of Nvidia stock, investors should probably treat it as a hold. Indeed, both long- and short-term investors have earned massive gains from this stock. With its dominance in the AI chip industry, it will almost certainly play a critical role in the industry for years to come. That could take the stock higher over time.

Nonetheless, given Nvidia's 226 P/E ratio, its likely gains for the foreseeable future are probably priced into the stock. And if it misses revenue or earnings expectations, it could experience a near-term sell-off. Considering its condition, investors should probably stay on the sidelines unless and until the valuation drops significantly.