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One ridiculous chart on Nvidia ahead of earnings
Nvidia (NVDA) stands out as one of the most undervalued AI stocks, trading at a forward price-to-earnings (P/E) multiple of 31, compared to Broadcom (AVGO) at 35 times, Marvell Technology (MRVL) at 41 times, and Arm Holdings (ARM) at 76 times. Even among the “Magnificent Seven,” Tesla (TSLA) trades at 121 times forward earnings, Amazon (AMZN) at 36 times, and Meta (META) at 26 times.
Two reasons might explain this odd valuation. Firstly, analysts may be undervaluing Nvidia’s earnings potential. Despite aggressive capital expenditure assumptions by hyperscalers like Amazon and Meta, Wall Street has not increased its 2025 earnings per share (EPS) estimates for Nvidia in over 60 days.
Secondly, the stock might be in a wait-and-see mode. Although shares have rallied from February lows, they have underperformed the S&P 500 this year, reflecting concerns over the China trade war and DeepSeek’s bullish AI thesis.
Despite these concerns, KeyBanc analyst John Vinh notes that “Nvidia remains uniquely positioned to benefit from AI/ML secular data center growth within the industry. With significant barriers to entry created by its CUDA software stack, we see limited competitive risks and expect Nvidia to continue to dominate one of the fastest-growing workloads in cloud and enterprise.”
The market may soon clarify this valuation disparity. On February 26, after the close, Finance will host a live special on Nvidia earnings, running from 4 p.m. to 6 p.m. ET. The next day, a roundtable discussion with Nvidia experts will air at 8:30 a.m. ET on Finance’s Opening Bid podcast. Tune in via the Finance homepage, app, or major streaming platforms.
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