Chipmaker Nvidia (NVDA) may be heading into its February 25 earnings report at one of its most attractive valuation points in years. Speaking on Yahoo Finance’s Opening Bid, B. Riley strategist Art Hogan said that Nvidia is trading at its cheapest valuation in roughly three years. He noted that the stock is currently around 25 times forward earnings, which is a figure that he expects to fall further after the company raises its guidance.
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This view comes at a time when sentiment toward large technology stocks has cooled off. Indeed, after years of tech dominance, RBC Capital Markets strategist Lori Calvasina pointed out that the weight of the top 10 stocks in the S&P 500 index (SPY) has decreased compared with the rest of the market. At the same time, fears of overspending on AI infrastructure have pressured tech valuations. As a result, the tech sector is now trading at its lowest valuation premium to the S&P 500 since the pandemic, as investors rotate toward healthcare, energy, and industrials, according to Evercore ISI.
Still, CEO Jensen Huang has continued to defend the long-term AI opportunity. Speaking at the World Economic Forum, Huang said that the demand for AI infrastructure is booming and could lead to the largest build-out in history, worth trillions of dollars. He also rejected claims of an AI bubble by arguing that the scale of investment simply reflects the size of the opportunity.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 40 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $263.11 per share implies 39.1% upside potential.
