Nvidia Corp's sinking stock valuation is sending a warning signal about the chipmaker's prospects for maintaining its booming profit growth.
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.
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"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."
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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 (SOX), down 6% on September 14.
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The index jumped 4.3% on Monday, its best day since August 4, after signs of success for Meta Platforms' new AI agent boosted optimism about chip demand.
