NVIDIA's stock price corresponds to a forward price-to-earnings ratio of 19.9 times as of Monday's close, the lowest level in seven years. Apple's forward P/E ratio is 28.7 times, significantly higher than NVIDIA's, yet Apple's revenue for the current fiscal year is projected to grow by only 12%, merely one-sixth of NVIDIA's expected growth rate of 71%. Analysts point out that the broader market decline due to geopolitical conflicts is insufficient to explain the extent of the valuation compression in the AI sector. NVIDIA, Microsoft, and Amazon—tech giants seen as the most direct beneficiaries of the artificial intelligence wave—are collectively seeing their stock valuations fall to multi-year lows. A rare valuation inversion is spreading through the market: the P/E ratio of the dominant AI chip leader is lower than that of Apple, whose growth rate is less than one-sixth of NVIDIA's.
According to The Information, as of Monday's close, NVIDIA's stock price was $165.17, corresponding to a forward P/E ratio of just 19.9 times, the lowest in seven years. Meanwhile, Apple's forward P/E ratio stands as high as 28.7 times—while NVIDIA's revenue for this fiscal year is expected to grow by 71%, Apple's is only about 12%. The collective repricing in the market is partly attributed to overall selling pressure triggered by recent geopolitical shocks. However, analysts note that the general market decline does not fully account for the magnitude of the valuation compression observed in these high-growth tech stocks. For institutions focused on AI-themed investing, the current valuation structure may indicate either systematic mispricing or a sign that market patience for the AI growth narrative is quietly fading.
NVIDIA: AI's Largest Beneficiary, Trading at a "Common Stock" Valuation NVIDIA's current valuation level has not been this low in nearly seven years. Citing Koyfin data, The Information reports that the stock's forward P/E has dropped to 19.9 times, below Apple's 28.7 times, despite a vast difference in their growth prospects. According to S&P Global Market Intelligence, NVIDIA's revenue for the fiscal year ending next January is projected to increase by 71%, while Apple's revenue growth for the fiscal year ending this September is estimated at only about 12%. In terms of monetization capability within the AI industry chain, NVIDIA has so far been the most direct and significant beneficiary; Apple, by contrast, has gained very little from the AI boom, with no clear contribution to its performance yet. However, the market's pricing logic does not seem to reflect this reality. Investors are awarding Apple a higher valuation premium, while valuing NVIDIA at multiples closer to those of traditional manufacturing—a contrast that constitutes one of the most notable valuation paradoxes within the tech sector today.
Microsoft and Oracle: A Decade-Long Valuation Gap Narrowing Sharply Also noteworthy is the significant narrowing of the valuation gap between Microsoft and Oracle. Two years ago, Microsoft's forward P/E was 34 times, while Oracle's was 20 times; now, Microsoft has fallen approximately 26% year-to-date, with its forward P/E dropping to 20.4 times, while Oracle's stands at 18.5 times—marking the first time in nearly a decade that their valuations have converged so closely. The fundamental logic supporting this repricing lies in the divergence in growth expectations. Analysts project Microsoft's annual revenue growth will remain around 16% for the coming years, lacking clear signs of acceleration. In comparison, Oracle's revenue growth is expected to surge from 8.4% in fiscal 2025 to 46.5% by fiscal 2028. However, this comparison has important limitations. Oracle's market size is much smaller than Microsoft's, and it is taking on significant debt to support expansion, resulting in higher financial leverage and a non-negligible risk premium. The Information characterizes this structural difference as the "AI opportunity."
Amazon: Lowest Valuation Since the Financial Crisis, Trading at a Discount to Walmart for the First Time Valuation anomalies are not unique to NVIDIA. According to Koyfin data, Amazon's current P/E multiple is at its lowest level since the 2008 financial crisis; more unusually, Amazon's stock is trading at a discount to Walmart's for the first time ever. This phenomenon is also difficult to explain based on fundamentals. Amazon's annual revenue growth is approximately 12% or higher, while Walmart's is around 5%; furthermore, Amazon's strategic position in cloud computing and AI infrastructure is far superior to Walmart's. This cross-sector valuation inversion reflects the current structural confusion in the market's pricing of tech stocks. The Information suggests that if this is a case of "selective AI caution syndrome," its reach extends far beyond chip stocks, affecting cloud computing and e-commerce platforms, and potentially exerting pressure on the upcoming IPOs of AI unicorns like OpenAI and Anthropic.
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