Nvidia has been the defining stock of the artificial intelligence era. So it comes as a surprise that, by at least one common yardstick, the chipmaker has rarely looked cheaper.
According to Investing.com, Bank of America says Nvidia's valuation is now the lowest it has been in 10 years, even as demand for AI chips remains what the firm describes as mind-blowing. A separate report from Benzinga frames the picture similarly, noting that Nvidia stock is eyeing an all-time high while key metrics point to what it calls bargain status.
The apparent contradiction — a stock near record levels that is simultaneously described as cheap — is less strange than it sounds. Valuation is a ratio, not a price. When investors talk about whether a stock is expensive, they usually mean its price relative to the company's earnings. If profits climb faster than the share price, the stock can hit new highs and still get cheaper on paper. That is the argument these reports are making about Nvidia: earnings growth has been outrunning the rally.
The skeptic's read is the mirror image. A low valuation multiple can also mean the market quietly doubts those earnings will hold — that the current wave of AI infrastructure spending by big tech customers is a spike rather than a plateau. Cheap-looking stocks at the top of a boom have a history of being cheap for a reason. Neither source, as summarized here, resolves that question.
Why it matters: Nvidia is among the most heavily weighted companies in major U.S. stock indexes, so whether its valuation reflects a genuine bargain or a market bracing for slower growth affects not just chip investors but nearly anyone holding an index fund or a retirement account.