NVIDIA Corporation (NASDAQ: NVDA) — This provider of visual computing technologies and the inventor of the graphics processing unit has been in the news this week thanks to a $1.5 billion settlement with Intel (NASDAQ: INTC) and its push to conquer the smartphone and tablet market.

Technology stocks were in focus on Wall Street yesterday, and the sector was led by NVDA, which soared 15% in one day, pushing the stock up more than 112% in just three months. 

But for a stock that is expected to earn just 31 cents per share (75 times earnings) this year, and possibly $1.05 (22.2 times earnings) next year, the big pop seems just a bit overdone. Has “irrational exuberance” again entered our markets?

A spike like that made by NVDA yesterday should make us pause and reflect on the current prices of technology stocks. Holders of NVDA should consider taking profits and buying in at a lower price at a later date or, at the very least, hedging their current position by writing calls or buying puts.  

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.