Wall Street investment bank Bernstein released a research report on the 19th, stating that despite NVIDIA's decent stock performance this year, its valuation has undergone significant compression amid continuously upward earnings revisions, now sitting at an attractive historical low.
According to trading desk sources, the report indicates that NVIDIA's stock price has stagnated since July, with a year-to-date gain of about 30%, underperforming the Philadelphia Semiconductor Index (SOX), which rose 38%. This divergence between stagnant stock prices and earnings growth has driven its forward P/E ratio down sharply to below 25x.
Bernstein analysts, including Stacy A. Rasgon, argue that NVIDIA is currently "extremely cheap" from both absolute and relative valuation perspectives. Compared to the broader semiconductor industry, NVIDIA is trading at a roughly 13% discount, placing it in the "first percentile" of its historical range over the past decade.
The analysts emphasize that the current price level presents an excellent buying opportunity. Historical data shows that investors who bought NVIDIA when its P/E ratio was below 25x typically reaped substantial returns, with an average one-year return exceeding 150% and no negative returns recorded during such periods.
**Valuation Hits "Rock Bottom," Multiple Catalysts Loom** According to Bernstein's calculations, a forward P/E of 25x means NVIDIA's valuation is in the 11th percentile of its 10-year range—an absolute low. More strikingly, relative valuation data shows that over the past decade, NVIDIA has traded at a cheaper level relative to the SOX index on only 13 trading days.
Addressing recent market concerns about the sustainability of AI capital expenditures (Capex), Rasgon noted that current Capex intentions remain healthy, and the competitive narrative of GPUs versus ASICs is regaining momentum. Looking ahead, CES and the GTC conference could provide further catalysts, with Rubin architecture products set to launch soon. Additionally, the Trump administration's approval of the H200 chip may create upside potential in the Chinese market.
Bernstein reiterated its "Outperform" rating on NVIDIA and set a price target of $275, suggesting that current market expectations may be too conservative given the company's Blackwell/Rubin guidance exceeding $500 billion.
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