- Chip designer lost 5% in overnight sell-off
- Now trading below pre-ChatGPT launch PE
- GTC AI gathering could provide stock catalyst
Wall Street’s savage sell-off overnight has left Nvidia (NVDA:NASDAQ) at its lowest valuation in years, amid Trump tariff and emerging recession threats, despite the company’s seemingly solid fundamentals.
Shares in the AI chipmaker fell 5% on 10 March trading to close at $106.98, bringing its market cap down to $2.62 trillion, nearly 40% off its record high in January 2025.
This leaves the stock trading on a next 12-months PE (price to earnings) multiple of 23.8, based on Koyfin consensus data, way down on January’s rough 35, and far below May 2023 levels, which nearly hit 70, making the stock significantly cheaper than when ChatGPT was first released in November 2022 (in the 40 to 45 range).
It means Nvidia is now trading at a valuation not seen since 2019.
TO BUY, OR NOT TO BUY THE DIP
Paraphrasing The Bard aside, investors will be wondering if now isn’t one of those opportunities to bulk up on Nivida’s growth story at a discounted price.
Ben Reitzes, managing director at Melius Research, thinks so. He believes the risks Nvidia faces have been largely priced in and sees a disconnect between the company’s valuation and its long-term growth potential.
‘We remain very optimistic’, Reitzes wrote in a note 10 March, pointing to next week’s GPU Technology Conference, where CEO Jensen Huang is expected to reaffirm Nvidia’s leadership in AI and unveil its product roadmap through 2027.
Nvidia posted stunning results right through 2024 for fiscal 2025, to end January, with full-year revenue of $130.5 billion, up 114%, and net income of $72 billion, up 145%. The company also expects another quarter of 60%-plus growth in revenues at a 70%-plus gross margin for the next quarter, as demand remains robust.
AI ROADMAP AT GTC 2025
Nvidia will also kick off the GTC 2025 AI conference in San Jose, California on 17 March. Last year, it announced the GB200 chip during the event, and many anticipate the unveiling of its next-generation product line-up and how Huang will shape the future of AI and Nvidia’s dominance.
Interestingly, Reitzes compared Nvidia’s current valuation reset to a historical precedent – Apple (AAPL:NASDAQ). In 2008, the iPhone maker’s forward PE fell from 33 on the day it announced the iPhone to just 15 by the end of the year amid the global financial crisis. However, the mobile revolution didn't end, and Apple now trades at 31-times earnings on significantly larger profit margins.
‘If Nvidia mirrors this kind of industry leadership, we could look back at this period of uncertainty and have a good chuckle’, Reitzes wrote.
