Nvidia PE hits 7-year low amid war and AI fears
Shares of Nvidia are now trading at their lowest valuation in seven years, as global market uncertainty and concerns over artificial intelligence spending weigh on investor sentiment.
The chipmaker’s forward price-to-earnings (PE) ratio has fallen to around 19.6, its lowest level since early 2019—before the AI boom sparked by tools like ChatGPT, News.Az reports, citing Reuters.
The drop comes amid a broader selloff driven by escalating tensions in the Middle East, particularly concerns that conflict involving Iran could push oil prices higher and fuel inflation.
S&P 500 has also declined this year, but Nvidia’s valuation falling below the broader index is notable, as high-growth tech firms typically trade at a premium.
Nvidia shares are down nearly 20% from their October peak and are on track for a quarterly loss of about 10%.
Investors are also growing cautious about the pace of returns from heavy AI investments by major tech companies such as Microsoft, Alphabet, and Amazon, all key Nvidia customers.
There are concerns that massive spending on AI infrastructure may take longer than expected to translate into profits, raising questions about the sustainability of the AI-driven market rally.
Despite the market pressure, Nvidia continues to report strong fundamentals, including rising margins and robust earnings forecasts. Analysts expect the company’s earnings to grow significantly faster than the broader market.
Still, experts warn that rapid technological change could disrupt even dominant players.
“Everything’s running on Nvidia chips, but that doesn’t mean it will stay that way,” one market strategist noted, highlighting the fast-evolving nature of the AI sector.
News.Az
By Aysel Mammadzada
