Nvidia Valuation Plunges Ahead of Earnings Report
Nvidia's valuation has taken a hit in recent months, falling sharply from its peak on October 29. The forward 12-month price-to-earnings (P/E) ratio for NVDA stock is now 26.9, lower than the recent peak of 27.4 and significantly lower than 36.1 at the end of October.
This decline in valuation comes as Nvidia prepares to release its fourth-quarter earnings report on Wednesday after the markets close. The report will have a significant impact on the market, particularly given the broad-based selloff in tech stocks. Despite this, retail investors remain cautious, with data from Stocktwits showing that their sentiment has turned bearish over the last two weeks.
Analysts are still optimistic about Nvidia's prospects, however, with 57 out of 61 recommending a 'Buy' rating and an average price target of $259.88, implying an upside of 34%. The company is well-positioned to benefit from the surge in capital expenditure plans by hyperscalers such as Amazon and Alphabet, which are planning to spend $200 billion and nearly double last year's outlay, respectively.