Senior tech analyst: Nvidia is really cheap
On June 19, renowned Wall Street investment bank Bernstein released a research report stating that although Nvidia's stock performance this year has been decent, its valuation has undergone significant compression as profit expectations continue to be revised upward, currently sitting at a historically attractive low.
According to Chase Wind Trading Desk, the report shows that since July this year, Nvidia's stock price has stagnated, with a year-to-date gain of about 30%, underperforming the Philadelphia Semiconductor Index (SOX), which has risen 38%. This stagnation in share price, coupled with profit growth, has caused its expected price-to-earnings ratio (P/FE) to fall sharply to below 25 times.
Bernstein analysts Stacy A. Rasgon and others believe that Nvidia is currently extremely “cheap,” both in absolute and relative valuation terms. Compared to the overall semiconductor industry, Nvidia's current trading price has about a 13% discount, putting it in the “first percentile” over the past decade.
The analysts emphasized that the current price is an excellent buying opportunity. Historical data shows that investors who bought Nvidia when its price-to-earnings ratio was below 25 usually saw substantial returns, with the average one-year return exceeding 150%, and no negative returns recorded during those periods.
Valuation drops to “floor price,” multiple catalysts poised to emerge
Bernstein estimates that a price-to-earnings ratio of 25 means Nvidia's current valuation is at the 11th percentile of its ten-year range, which is an absolute low. Even more striking is the relative valuation data: in the past ten years, there have only been 13 trading days when Nvidia traded even cheaper relative to the SOX index than now.
Addressing recent market concerns over the sustainability of AI capital expenditure (Capex), Rasgon pointed out that current Capex intentions remain healthy, and the narrative of GPU competitiveness versus ASICs is regaining momentum. Looking ahead to the new year, the CES and GTC conferences are expected to provide further catalysts, with Rubin architecture products set to debut. In addition, the Trump administration’s approval of H200 chips could open up upside for the Chinese market.
Bernstein reiterated its “outperform” rating for Nvidia and set a target price of $275, believing that given the company's more than $500 billion Blackwell/Rubin guidance, the current market expectations may be too low.
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The above content is from Chase Wind Trading Desk.
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