We asked about one of the biggest mysteries surrounding Nvidia's (NVDA) stock in the Morning Brief newsletter, and you responded with insightful analysis.
Why does the stock still look so cheap on a forward price-to-earnings (P/E) multiple basis?
Nvidia isn't some struggling also-ran tech company like Intel (INTC) — it's an artificial intelligence juggernaut that is dominating its industry. And it has a strong double-digit percentage earnings growth outlook for 2025, 2026, and beyond to show for it.
On a forward price-to-earnings multiple basis, chof360 Finance data shows Nvidia trading at 31 times. Broadcom (AVGO) and Marvell Technology (MRVL) are valued at 35 times and 41 times, respectively. Arm Holdings (ARM) clocks in at 72 times.
"It's become the proverbial canary in the coal mine," one chof360 Finance reader emailed me on Monday morning, pointing to economic risks ahead, such as tariffs impacting corporate profits. "In short, many of the high P/E, stratospheric valuation companies, already priced-for-perfection ... and beyond! (such as Palantir) will plummet back to Earth in a swath similar to Skylab junk over Western Australia in a rotation stampede back to defensive value," the reader added.
I suspect this valuation disparity may be more easily explained seconds after Nvidia earnings hit on Feb. 26 after the market close.
The chof360 Finance team will aim to put Nvidia's earnings and outlook in the context of its valuation, similar to the approach of longtime Nvidia investor Louis Navellier.
Listen: Why Nvidia may be unstoppable
We are having a live Nvidia earnings special on Feb. 26, starting at 4 p.m. ET and running until 6 p.m. ET. The next day, we will have a live episode of the Opening Bid podcast with a great roundtable of Nvidia pros. You can tune in on the new Streaming Now section on the chof360 Finance homepage, our app, or major streaming platforms.
In the meantime, here are some of the responses about Nvidia's valuation you sent me on X.
Brian Sozzi is chof360 Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].
Story Continues
