Key Highlights
- NVDA’s forward price-to-earnings ratio has dropped to approximately 19.6x — the lowest level observed since the beginning of 2019 and now trailing the S&P 500’s PE of roughly 20
- Shares have declined almost 20% from the October 2025 all-time high of $207, erasing approximately $800 billion in market capitalization
- More than $70 billion in NVDA shares were liquidated by institutional investors during Q4 2025, with 2,627 institutional funds reducing their holdings
- The company delivered 65% year-over-year revenue expansion in fiscal 2026, hitting $215.9 billion, while Data Center segment revenue surged 75%
- Jensen Huang, the company’s CEO, forecasted a minimum of $1 trillion in aggregate revenue from the Blackwell and Vera Rubin product lines by 2027
The chipmaker currently valued at approximately $4 trillion is experiencing a valuation compression not witnessed since before artificial intelligence became Wall Street’s dominant theme. The forward-looking PE multiple has contracted to around 19.6x — a figure that now sits beneath the S&P 500’s current multiple of approximately 20.
This represents a remarkable shift for a company whose shares have skyrocketed more than 1,000% following ChatGPT’s debut in November 2022. Throughout most of this meteoric rise, Wall Street assigned premium valuations to the stock specifically due to its extraordinary earnings momentum.
Multiple headwinds have contributed to the recent decline. Escalating geopolitical tensions involving the U.S.-Israel conflict with Iran have driven crude oil prices upward, intensifying inflation fears and increasing speculation about potential Federal Reserve rate increases. Nvidia has become ensnared in this broader risk-off sentiment.
Another concern specific to the AI sector has emerged. Major hyperscale customers — Microsoft, Alphabet, and Amazon — have deployed massive capital toward AI infrastructure buildouts, yet investors are growing skeptical about the timeline for converting these expenditures into meaningful returns. This uncertainty has created headwinds across AI-related equities.
Major Institutional Exodus
The scale of institutional liquidation demands attention. During the fourth quarter of 2025, approximately 2,627 institutional funds reduced their NVDA allocations, disposing of roughly 440 million shares representing about $73.5 billion in market value at the time of sale. Notable sellers included FMR LLC, JPMorgan Chase, T. Rowe Price, Northern Trust, and UBS Asset Management.
However, the picture isn’t entirely bearish. Approximately 3,090 institutional investors expanded their positions during the identical timeframe, acquiring over 648 million shares. Institutional ownership remains substantial at 67.75% of outstanding shares.
Shares settled at $167.52 on March 27, representing a significant discount to the October 2025 record of $207.
Business Performance Remains Robust
What makes this valuation compression particularly noteworthy: Nvidia’s operational performance continues to excel. Fiscal 2026 full-year revenue expanded 65% to $215.9 billion. Fourth-quarter revenue jumped 73% on a year-over-year basis to $68.1 billion. Gross profit margins remain at an impressive 75%. Wall Street analysts are modeling average earnings growth exceeding 70% for the current fiscal year, dramatically outpacing the S&P 500’s projected 19% expansion.
Analysts at B. Riley Wealth maintain their buy rating 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.”
Contrarian voices exist, however. Dennis Dick, a proprietary trader with Triple D Trading, highlighted potential disruption risks to AI hardware. “Everything’s running on Nvidia chips, but that doesn’t mean it’s going to be that way in two or three years,” he cautioned.
During the GTC 2026 conference, CEO Jensen Huang outlined expectations for no less than $1 trillion in combined revenue from the company’s Blackwell and Vera Rubin AI platforms extending through 2027.
