Key Takeaways
- NVDA shares declined 0.9% to $206.41 on Wednesday, marking a 7.8% drop over the past 30 days
- The company’s forward P/E ratio now stands at 20.4x, trailing the S&P 500’s 20.8x multiple
- Loop Capital Markets’ Ananda Baruah initiated Strong Buy coverage with a $350 price target
- Average GPU selling prices have surged from $26,000 to $33,000 due to data center demand
- The chipmaker expects to distribute more than $97 billion to investors in 2026 through dividends and share repurchases
Shares of Nvidia continued their downward trajectory Wednesday morning, dropping 0.9% to $206.41 as the semiconductor giant extended losses that have totaled 7.8% throughout May.
This recent decline has compressed NVDA’s forward price-to-earnings multiple to 20.4 times—a figure that now falls beneath the S&P 500’s 20.8 times valuation, per FactSet.
This represents a notable reversal. Nvidia was highlighted as an attractive opportunity by Barron’s when shares traded near $226 with a forward P/E of 26 times. The stock now carries a lower valuation multiple than the benchmark index.
Nancy Tengler, CEO of Laffer Tengler Investments, revealed her firm incorporated Nvidia into its value-oriented portfolio following the recent decline. “At roughly 20 times next year’s earnings and 23 times 2027 earnings, with expected earnings growth of 87%, we’d much rather be invested there than in a consumer staples company,” she explained.
The stock weakness persists even after Nvidia delivered robust quarterly results last month and showcased next-generation products at Computex in Taiwan recently.
Analyst Establishes $350 Price Objective
While momentum traders have been exiting positions, one prominent Wall Street voice is leveraging the weakness to build a compelling bull case.
Loop Capital Markets analyst Ananda Baruah initiated coverage with a Strong Buy recommendation and established a $350 price objective—representing potential gains of 68% from the current $209 level.
Baruah outlined three core pillars supporting his thesis. The first centers on his view that the technology sector is transitioning into the subsequent phase of AI infrastructure expansion, with Nvidia commanding the leading position.
His second point highlights projections showing GPU shipment volumes doubling within the next 12 to 18 months, a dynamic he expects will propel the stock higher approaching 2027.
The third factor focuses on accelerating GPU pricing. Individual GPU average selling prices have climbed from $26,000 to $33,000, propelled by intensifying data center requirements.
Capital Allocation Strategy Strengthens Investment Thesis
Beyond expansion prospects, Nvidia’s shareholder-friendly capital deployment is attracting attention from value-minded market participants.
Management has committed to returning 50% of free cash flow via dividends and stock buybacks. With free cash flow forecasted to reach approximately $194 billion in 2026, shareholders can expect over $97 billion in distributions.
This magnitude of capital return, paired with a valuation that now trails the S&P 500, explains why value investors are gravitating toward a stock traditionally absent from their holdings.
Trading at $206.41, NVDA sits roughly 11% below recent peak levels, though the stock maintains an 11% gain for the current year.
Baruah’s $350 price target suggests potential upside of approximately $141 per share from present trading levels.
