Despite its revenue growing at record speeds, Nvidia (NASDAQ: NVDA) is now trading near its lowest valuation since the start of the artificial intelligence (AI) boom.
Indeed, the chipmaker’s revenue grew 65% last year, but the stock, trading at $117.24 at the time of writing on March 27, 2026, enjoys a price to earnings ratio (P/E) of roughly 35x.
For comparison, in September last year, it stood at 53x, while in late summer 2023, it at one point sat at 163x.
In other words, Nvidia’s stock has become significantly cheaper relative to its earnings, even as its business continues to expand at a historic pace.
Is Nvidia stock falling out of favor?
Tech stocks overall appear to have recently fallen out of favor with investors. For example, the S&P 500 information technology sector is down 7.8% on the six-month chart. Over the same period, Nvidia has gone down 5.8%. Since the company continues to post solid revenue, the share performance appears not to conform, even as demand from some of the world’s largest technology enterprises continues to grow.
The failure to gain traction likely lies in the semiconductor maker’s valuation, as trading at a forward P/E of roughly 35 implies the stock is priced for near-flawless execution. That is because such a multiple assumes the company can continue converting robust demand into revenue while maintaining extraordinary profitability.
Looking ahead, the management guides for the fiscal first-quarter 2027 revenue of around $78 billion. Moreover, at Nvidia’s recent GTC event, CEO Jensen Huang forecasted at least $1 trillion in revenue from 2025 through 2027.
For a sustained breakout, Nvidia will thus likely need to demonstrate that its flagship products can attract customers and offset the heightened volatility. Alternatively, a new, stronger-than-expected AI boom could provide the catalyst to push shares higher.
That is, until the market gains confidence that the current state of the AI sector will not suffer a sharp downcycle, Nvidia stock could remain range-bound despite the company’s historic growth.
Featured image via Shutterstock
