Catenaa, Tuesday, September 22, 2026- Nvidia stock is trading near its lowest valuation in more than a decade, despite shares gaining 23% so far this year.
According to Bloomberg News, at less than 17 times profit expected over the next 12 months, the chipmaker’s stock multiple has been cut by 15% compared to 2025, when Nvidia’s profits were down from more than 25 times earnings estimates as of May.
“The stock has de-rated pretty significantly, which suggests a healthy dose of skepticism that the company’s current earnings power is sustainable,” Eli Horton, a TCW senior portfolio manager overseeing thematic and durable growth equities, told Bloomberg.
“The stock’s performance is surprising, given the backdrop of incredible fundamentals, but it tells you the market is expecting less than what the consensus is currently estimating.”
Bloomberg said that Nvidia’s discounted valuation persists even with the shares coming off of a five-day winning streak.
The advance came amid a rebound in chip stocks after AI leaders’ calls for a slowdown in AI development, and according to Bloomberg, the Philadelphia Stock Exchange Semiconductor Index was down nearly 6% on September 14.
Bloomberg data also showed that the index is up almost 77% this year, with Micron, Intel and AMD leading the gains with over 180%. Nvidia is the fifth-worst performer in the index, which is priced at 20 times estimated profit.
Analyst estimates compiled by Bloomberg showed that Nvidia’s gross margin is sliding below 72% by the fourth quarter, despite being at 75% last quarter, with a recovery expected thereafter, as rising costs of memory chips are the key factor.
Nvidia’s gross margin is a major factor holding its shares back, David Russell, Global Head of Market Strategy at TradeStation, told Bloomberg.
He expects competition to intensify, especially as some of Nvidia’s biggest customers develop AI chips in-house.
According to Bloomberg, Meta recently touted its home-grown chips, and Alphabet has made a major business out of its own.
Nvidia CEO Jensen Huang has pushed back on the market’s assessment, calling the company “the world’s first and only growth value stock” and describing Nvidia as “incredibly misunderstood” at a Goldman Sachs technology conference earlier this month.
The valuation discount follows a stretch of strong results. Nvidia stock climbed roughly 7% after its second-quarter earnings, when revenue more than doubled, and the company projected 70% revenue growth in fiscal 2028, well above the 45% analysts had expected at the time.
