Nvidia's falling valuation signals market doubts on profit growth

September 22, 2026 at 02:28 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Nvidia Corp. shares trade at less than 17 times forward earnings, near the cheapest level in more than a decade, according to Bloomberg data. The multiple is half what the stock commanded in 2025 and down from over 25 times earnings estimates as recently as May. The de-rating persists even as Nvidia capped a five-day winning streak on Monday amid a broader semiconductor rebound.

Key Facts

Nvidia's forward price-to-earnings ratio is below 17, near the lowest in more than a decade, according to Bloomberg data.
The multiple is half what the stock commanded in 2025 and down from more than 25 times earnings estimates as recently as May.
Nvidia's revenue and net income are expected to jump 90% and 99%, respectively, in fiscal 2027, which ends in January.
In its second-quarter earnings report last month, Nvidia projected sales would expand 70% in fiscal 2028, above the 45% growth that had been expected.
Nvidia's shares are up 22% in 2026, the second-best performance among the Magnificent Seven technology giants after Apple Inc.'s 25% gain.

Valuation Compression

Nvidia's stock trades at less than 17 times expected profit over the next 12 months, according to data compiled by Bloomberg. That multiple is half what the stock commanded in 2025 and down from more than 25 times earnings estimates as recently as May. Eli Horton, senior portfolio manager at TCW, said the stock has de-rated significantly, suggesting skepticism that current earnings power is sustainable. Horton added that the stock's performance is surprising given incredible fundamentals, but it indicates the market expects less than consensus estimates.

Market Reaction

Nvidia's discounted valuation persists even after the shares capped a five-day winning streak on Monday. The advance came amid a broader rebound in semiconductor stocks after AI leaders' calls to slow development of advanced AI models spooked investors. The Philadelphia Stock Exchange Semiconductor Index fell nearly 6% on Sept. 14, then jumped 4.3% on Monday, its best day since Aug. 4. Early signs of success for Meta Platforms Inc.'s new AI agent boosted optimism about chip demand.

Growth Outlook

Nvidia's revenue and net income are expected to jump 90% and 99%, respectively, in fiscal 2027, which ends in January. That is up from 65% growth for both metrics the year before. In its second-quarter earnings report last month, Nvidia projected sales would expand 70% in fiscal 2028, well above the 45% growth that had been expected. Nvidia's shares are up 22% in 2026, the second-best performance among the Magnificent Seven technology giants after Apple Inc.'s 25% gain. The advance pales in comparison to other semiconductor makers, however.