(Bloomberg) — Nvidia Corp.’s sinking stock valuation is sending a warning signal about the chipmaker’s prospects for maintaining its booming profit growth.
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At less than 17 times profit expected over the next 12 months, Nvidia’s shares are trading near the cheapest level in more than a decade, according to data compiled by Bloomberg. The multiple is half what the stock commanded in 2025, when Nvidia’s revenue and profit growth was slower, and down from more than 25 times earnings estimates as recently as May.
“The stock has de-rated pretty significantly, which suggests a healthy dose of skepticism that the company’s current earnings power is sustainable,” said Eli Horton, senior portfolio manager for thematic equities and durable growth equities at TCW. “The stock’s performance is surprising, given the backdrop of incredible fundamentals, but it tells you the market is expecting less than what the consensus is currently estimating.”
Nvidia’s discounted valuation persists even after the shares capped a five-day winning streak on Monday. The advance came amid a broader rebound in semiconductor stocks after AI leaders’ calls to slow development of the most advanced AI models spooked investors, sending the Philadelphia Stock Exchange Semiconductor Index, better known as the SOX, down nearly 6% on Sept. 14.
The index jumped 4.3% on Monday, its best day since Aug. 4, after early signs of success for Meta Platforms Inc.’s new AI agent boosted optimism about chip demand.
Even though there are plenty of worries about the broader outlook for spending on AI computing gear amid a backlash against data center construction and soaring interest rates, there are no signs that infrastructure investments are set to slow anytime soon.
Nvidia’s revenue and net income are expected to jump 90% and 99%, respectively, in fiscal 2027, which ends in January. That’s up from 65% growth for both metrics the year before. In its second-quarter earnings report last month, Nvidia projected that sales would expand 70% in fiscal 2028, well above the 45% growth that had been expected.
Nvidia’s shares are up 22% in 2026, a performance that ranks as the second-best among the Magnificent Seven technology giants after Apple Inc.’s 25% gain. The advance pales in comparison to other semiconductor makers, however.
