Key Highlights
- Nvidia’s forward price-to-earnings ratio has declined to approximately 19.6x — the lowest level since early 2019 and beneath the S&P 500’s ~20x multiple
- Shares have dropped nearly 20% from the October 2025 all-time high of $207, erasing roughly $800 billion in market capitalization
- More than $70 billion in NVDA shares were sold by institutional investors during Q4 2025, with 2,627 funds reducing their holdings
- The company delivered 65% revenue expansion in fiscal 2026, totaling $215.9 billion, while Data Center sales surged 75%
- Jensen Huang, CEO, forecasts a minimum of $1 trillion in combined revenue from Blackwell and Vera Rubin platforms by 2027
The semiconductor giant, which commands a market valuation near $4 trillion and holds the title of the world’s most valuable company, is now changing hands at earnings multiples last observed before artificial intelligence dominated market narratives. The forward-looking PE ratio has contracted to around 19.6x — actually trading beneath the S&P 500’s current multiple of approximately 20.
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 that remarkable rally, the market assigned Nvidia premium multiples based on its extraordinary earnings expansion.
Several headwinds have contributed to the recent decline. Macroeconomic anxieties surrounding escalating tensions between the U.S.-Israel alliance and Iran have driven crude oil costs upward, amplifying inflation worries and increasing speculation about potential rate increases. Nvidia has been swept up in this broader risk-off sentiment.
Additionally, a more targeted concern weighs on investor sentiment. Major hyperscale clients — Microsoft, Alphabet, and Amazon — have deployed massive capital toward AI infrastructure buildouts, yet market participants are questioning the timeline for converting these expenditures into meaningful revenue streams and profitability. This skepticism has dampened enthusiasm across the entire AI ecosystem.
Massive Institutional Exit
The scale of institutional liquidation is substantial. Throughout Q4 2025, approximately 2,627 institutional funds decreased their Nvidia allocations, disposing of roughly 440 million shares valued at about $73.5 billion based on prevailing prices. Notable sellers included FMR LLC, JPMorgan Chase, T. Rowe Price, Northern Trust, and UBS Asset Management.
However, the picture isn’t entirely bearish. Approximately 3,090 institutions simultaneously expanded their positions during this timeframe, acquiring over 648 million shares. Overall institutional ownership remains elevated at 67.75% of outstanding shares.
Shares settled at $167.52 on March 27, representing a significant discount from the October 2025 high of $207.
Robust Operating Performance Fails to Lift Sentiment
What makes this drawdown particularly noteworthy is the disconnect with Nvidia’s operational strength. Full fiscal year 2026 revenue jumped 65% to $215.9 billion. Fourth-quarter revenue climbed 73% on a year-over-year basis to $68.1 billion. Gross profit margins stand at an impressive 75%. Wall Street analysts project average earnings growth exceeding 70% for the current fiscal year, dramatically outpacing the S&P 500’s anticipated 19% growth.
Analysts at B. Riley Wealth maintain a positive stance on the shares. Art Hogan, the firm’s chief market strategist, 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.”
Conversely, some market observers express caution. Dennis Dick, a proprietary trader at Triple D Trading, highlighted potential disruption risks in AI hardware. “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 outlined ambitious targets, projecting no less than $1 trillion in aggregate revenue from the company’s Blackwell and Vera Rubin AI platforms extending through 2027.
