Nvidia’s price-to-earnings ratio has dipped below its levels from when ChatGPT launched in 2022. This decline is part of a broader downturn in semiconductor stocks, with Nvidia shares down 30% from their 52-week peak.
Melius Research maintains an optimistic outlook on Nvidia as it approaches its conference next week. A key valuation metric for Nvidia has now fallen to levels not seen since before ChatGPT’s release. As of Monday, Nvidia’s trailing 12-month price-to-earnings ratio was recorded at 36.4 times, reflecting a significant decline driven by a steep drop in Nvidia’s stock price, which is now 30% lower than the record high it reached earlier this January.
This decline in valuation makes Nvidia more affordable than it was at the time of ChatGPT’s launch on November 30, 2022, placing the stock at its lowest valuation level since August 2019. Ben Reitzes, managing director at Melius Research, pointed out that this valuation trend is also evident in Nvidia’s forward P/E ratio, which factors in Wall Street’s earnings forecasts for the upcoming year. He noted that with a forward P/E of 24 times, Nvidia’s stock is 41% cheaper than it was at ChatGPT’s launch.
This is particularly notable considering that Nvidia shares surged 583% after OpenAI made ChatGPT available. The stock price increase was supported by substantial profits, as demand for Nvidia’s GPUs spiked due to the AI boom. Nvidia’s net income for fiscal year 2025 surged 788% compared to fiscal year 2023, which concluded in January 2023.
Reitzes sees a disconnect in Nvidia’s valuation and believes the risks have already been factored into semiconductor stocks like Nvidia. “We remain very optimistic,” he stated. Part of this optimism is linked to Nvidia’s upcoming GPU Technology Conference, where CEO Jensen Huang is anticipated to reassure investors about the ongoing AI boom and reveal the product roadmap extending into 2027.
Reitzes’ continued bullish stance on Nvidia is influenced by a previous valuation compression he observed in another tech giant: Apple. “A similar scenario occurred with Apple back in 2008 when its forward multiple fell from 33 times following the iPhone announcement to 15 times during the crisis,” he explained. “As history shows, the mobile trend did not falter then — Apple now trades at 31 times earnings with much larger figures. Should Nvidia replicate a version of this industry leadership, we might reflect on this uncertain phase with amusement,” he added.
Melius Research currently rates Nvidia as a “Buy” and has set a price target of $170, indicating a potential upside of 60% from its current pricing.
