Nvidia's trailing price-to-earnings ratio has dropped to 31.7, the lowest it has been since the artificial intelligence trend began in 2023. Motley Fool contributor Keithen Drury argues the stock's 23 times forward earnings sits barely above the S&P 500's 21.1 times, even though Nvidia is expected to grow revenue at a 42% rate the following year.
Nvidia trades at a trailing P/E ratio of 31.7, the lowest reading of the AI trend that began in 2023, according to Motley Fool contributor Keithen Drury. He reads that stock valuation as an opportunity rather than a warning, because none of next year's expected growth, in his view, is priced into the shares.
The stock has not behaved like its usual self this year. Nvidia has risen around 11% in 2026, just barely outpacing an S&P 500 that is up just over 8% — not the market-crushing performance investors have come to expect from the world's largest company, Drury writes.
Nvidia's multiple sits near Apple's and Amazon's
Drury compares the chipmaker directly with its big tech peers: Apple and Amazon trade for 40.3 and 27.8 times trailing earnings, respectively. Yet Nvidia is growing far faster than either of them, with a year-over-year growth rate of 85%.
The forward picture is tighter still. At 23 times forward earnings, the stock is barely more expensive than the S&P 500 at 21.1 times — a market-average price tag on a company expected to grow revenue at a 42% rate the following year.
Shares changed hands at $197.34, up 0.42%, inside a day's range of $192.75 to $198.70. That leaves a market capitalization of $4.8 trillion, with the stock still below its 52-week high of $236.54.
Hyperscaler budgets carry the 2027 case
Behind the multiple sits spending. Drury points to more reports from AI hyperscalers of increased spending in 2027. He also cites Nvidia's own forecast of $1 trillion or more in data center capital expenditures from them.
Because the AI build-out is expected to last several more years, he treats that pipeline as substantial growth the market has yet to pay for. For Drury, the gap between those capital budgets and Nvidia's market-average forward multiple is the whole of the argument.
Source: The Motley Fool
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