Nvidia Stock Plummets to 10-Year Low Valuation Multiple

Nvidia's shares are trading at less than 17 times forward earnings, raising concerns about the company's long-term sustainability. This is a significant drop from its peak in 2025 and marks the stock's cheapest valuation multiple in over a decade.

The semiconductor market has recovered somewhat, with the Philadelphia Stock Exchange Semiconductor Index (SOX) up around 2% on Tuesday, but Nvidia's stock is still lagging behind industry peers. Despite strong fundamentals, including projected revenue growth of 90% for fiscal 2027, investors remain cautious due to declining gross margins and rising competition from rival chipmakers.

Nvidia's current valuation of under 17 times forward earnings is a warning sign regarding the company's ability to maintain its massive profit trajectory. The market is pricing in lower expectations than Wall Street consensus projections, according to Eli Horton, senior portfolio manager for thematic and durable growth equities at TCW. While the company's financial performance remains strong, investors are skeptical about the durability of Nvidia's current earnings capacity.