Key Takeaways
- Nvidia’s forward price-to-earnings multiple has contracted to approximately 19.6x — the lowest level since early 2019 and now trailing the S&P 500’s ~20x PE
- Shares have retreated nearly 20% from the October 2025 all-time high of $207, erasing roughly $800 billion in market capitalization
- More than 2,600 institutional investors liquidated over $70 billion in NVDA shares during Q4 2025
- The company delivered 65% year-over-year revenue expansion in fiscal 2026, hitting $215.9 billion, while Data Center sales surged 75%
- Jensen Huang, the company’s CEO, forecasts cumulative revenue exceeding $1 trillion from Blackwell and Vera Rubin architectures by 2027
Nvidia, which commands a market capitalization hovering around $4 trillion, is currently valued at a forward earnings multiple unseen since before artificial intelligence emerged as a dominant investment theme. The company’s forward PE has compressed to approximately 19.6x — a figure that now sits beneath the S&P 500’s current multiple of roughly 20.
This marks a dramatic shift for shares that have skyrocketed more than 1,000% since ChatGPT’s debut in late 2022. Throughout much of that extraordinary rally, the market assigned Nvidia premium valuations driven by its remarkable earnings acceleration.
The recent decline stems from multiple converging forces. Escalating geopolitical tensions involving the U.S. and Israel’s conflict with Iran have driven crude oil prices upward, amplifying inflation anxieties and increasing speculation about potential rate increases. Nvidia has been swept up in this broader market turbulence.
Additionally, investors are grappling with concerns specific to the AI ecosystem. Major cloud providers — Microsoft, Alphabet, and Amazon — have allocated massive capital toward AI infrastructure buildouts, yet market participants are questioning the timeline for converting these investments into tangible revenues and profits. This uncertainty has dampened enthusiasm across AI-related equities.
Significant Institutional Divestment
The scale of institutional selling has been substantial. During Q4 2025, approximately 2,627 investment funds reduced their Nvidia holdings, disposing of roughly 440 million shares valued at about $73.5 billion based on contemporaneous prices. Notable sellers included FMR LLC, JPMorgan Chase, T. Rowe Price, Northern Trust, and UBS Asset Management.
However, the picture isn’t entirely bearish. About 3,090 institutions expanded their positions during the identical timeframe, accumulating more than 648 million shares. Institutional investors continue to hold 67.75% of outstanding shares.
The stock settled at $167.52 on March 27, trading substantially beneath its October 2025 record of $207.
Robust Financial Performance Despite Market Skepticism
What makes the current situation particularly noteworthy is the disconnect between market sentiment and Nvidia’s operational results. Full-year fiscal 2026 revenue expanded 65% to reach $215.9 billion. Fourth-quarter revenue jumped 73% year-over-year to $68.1 billion. The company maintains gross margins at 75%. Wall Street analysts project average earnings growth exceeding 70% for Nvidia in the current fiscal year, dramatically outpacing the S&P 500’s anticipated 19% growth rate.
Analysts at B. Riley Wealth maintain their buy recommendation on the stock. Art Hogan, the firm’s chief market strategist, emphasized the valuation opportunity: “Trading at a multiple that is lower than the S&P 500, I think it’s an easy decision to make.”
Conversely, some market observers express caution. Dennis Dick, a proprietary trader with Triple D Trading, highlighted potential technological disruption risks. “Everything’s running on Nvidia chips, but that doesn’t mean it’s going to be that way in two or three years,” he noted.
During GTC 2026, CEO Jensen Huang outlined ambitious expectations, projecting cumulative revenue of at least $1 trillion from the company’s Blackwell and Vera Rubin AI platforms extending through 2027.
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