NVIDIA Valuation Falls Below 20x Forward Earnings After $1T Slide

NVIDIA is trading near its cheapest valuation since before the AI boom, after a slide of roughly $1 trillion in market value from its May record.

The stock has fallen about 16% since its May 14 high, leaving NVIDIA at about 18 times projected earnings. That places the AI chip leader below the forward earnings multiple of the S&P 500 and Nasdaq 100, and beneath some slower-growth consumer names such as Hershey.

The compression is unusual because NVIDIA’s earnings base is still expanding. The company reported record first-quarter revenue of $81.6 billion, up 85% from a year earlier, with Data Center revenue reaching $75.2 billion. Non-GAAP gross margin was 75%, keeping the company near the high end of large-cap technology profitability even as the stock’s multiple fell.

AI Trade Faces Valuation Reset

NVIDIA’s lower multiple reflects a shift in how investors are pricing the AI infrastructure cycle. The market has moved from paying peak multiples for chip scarcity and hyperscaler spending to testing whether data-center capital expenditure can keep converting into earnings growth at the same pace.

The pressure has spread across the wider AI trade. Earlier this year, the U.S. stock market entered an almost-bubble zone around AI-led concentration, with index performance increasingly tied to a narrow group of technology, cloud and semiconductor leaders.

That concentration cuts both ways for NVIDIA. Strong AI demand still supports revenue, margins and backlog expectations, but a more crowded investor base makes the stock vulnerable when buyers rotate into other semiconductor names or question how long hyperscaler spending can keep growing.

BofA Keeps Buy Rating As Stock Lags Chips

Bank of America kept a Buy rating and $350 price target on NVIDIA, framing the selloff as a buying opportunity after the stock lagged the Philadelphia Semiconductor Index. NVIDIA was up about 3% year-to-date, while the SOX index had gained 82%, creating a sharp split between the sector’s strongest benchmark and its best-known AI chipmaker.

The bank pointed to four concerns weighing on NVIDIA: margin pressure from high-bandwidth memory costs, custom ASIC competition from hyperscalers, crowded ownership and questions over vendor-financing activity. The same note put NVIDIA at 18 times forward earnings, a seven-year low that BofA viewed as pricing in too much damage to 2027 and 2028 earnings.

The valuation reset also feeds into crypto-market risk because AI has absorbed a large share of speculative and institutional capital. Arthur Hayes warned that an AI bubble burst could hit Bitcoin first if investors sell liquid crypto positions to cover losses before policy support arrives.