Key Takeaways
- Nvidia’s forward price-to-earnings multiple has declined to approximately 19.6x, marking its lowest level since early 2019 and now trailing the S&P 500’s ~20x PE
- Shares have plummeted nearly 20% from the October 2025 all-time high of $207, erasing roughly $800 billion in market capitalization
- More than 2,600 institutional investors liquidated over $70 billion in NVDA shares during Q4 2025
- The company delivered exceptional performance with 65% revenue expansion in fiscal 2026, totaling $215.9 billion, while Data Center sales jumped 75%
- Jensen Huang, Nvidia’s CEO, forecasts a minimum of $1 trillion in combined revenue from Blackwell and Vera Rubin architectures by 2027
The world’s most valuable company by market capitalization, currently worth approximately $4 trillion, is now being valued at earnings multiples last witnessed before artificial intelligence became a market obsession. Nvidia’s forward-looking PE ratio has compressed to roughly 19.6x — actually beneath the S&P 500’s present valuation of around 20x.
This represents a dramatic shift for shares that have skyrocketed more than 1,000% following ChatGPT’s debut in late 2022. Throughout the majority of this extraordinary rally, market participants granted Nvidia elevated valuation multiples specifically due to its remarkable earnings acceleration.
The recent downturn stems from multiple catalysts. Widespread market anxiety surrounding escalating tensions between the U.S.-Israel alliance and Iran has propelled crude oil prices upward, intensifying inflation worries and increasing speculation about potential rate increases. Nvidia has become entangled in this broader market liquidation.
Additionally, there’s a more targeted concern affecting the shares. Major hyperscale clients — Microsoft, Alphabet, and Amazon — have been deploying massive capital toward AI infrastructure buildouts, yet market participants remain skeptical about the timeline for converting these expenditures into meaningful top-line growth and profitability. This ambiguity has undermined sentiment across the entire AI investment theme.
Institutional Investors Retreat
The scale of institutional divestment is substantial. Throughout Q4 2025, approximately 2,627 investment funds reduced their Nvidia holdings, disposing of roughly 440 million shares valued at about $73.5 billion based on prevailing prices. Major sellers included FMR LLC, JPMorgan Chase, T. Rowe Price, Northern Trust, and UBS Asset Management.
However, the picture wasn’t entirely negative. Approximately 3,090 institutional players expanded their positions during this same timeframe, accumulating more than 648 million shares. Institutional ownership currently represents 67.75% of outstanding shares.
The stock settled at $167.52 on March 27, trading significantly beneath its October 2025 record of $207.
Robust Business Performance Fails to Lift Shares
What makes this scenario particularly noteworthy: Nvidia’s operational results remain exceptional. Full-year fiscal 2026 sales increased 65% to $215.9 billion. Fourth-quarter revenue surged 73% on a year-over-year basis to $68.1 billion. Gross profit margins are holding at 75%. Wall Street analysts project average earnings expansion exceeding 70% for Nvidia during the current fiscal year, versus just 19% anticipated for the broader S&P 500.
Some analysts maintain bullish positions on the stock. Art Hogan, chief market strategist at B. Riley Wealth, emphasized the valuation opportunity: “Trading at a multiple that is lower than the S&P 500, I think it’s an easy decision to make.”
Others express caution. Dennis Dick, a proprietary trader with Triple D Trading, highlighted potential technological disruption risks. “Everything’s running on Nvidia chips, but that doesn’t mean it’s going to be that way in two or three years,” he noted.
During GTC 2026, CEO Jensen Huang announced expectations for at least $1 trillion in aggregate revenue generated by the Blackwell and Vera Rubin AI platforms through 2027.
