Nvidia PE falls to 14-year low, but CEO exit and AI worries cloud the bargain
NVDA•Nvidia shares are valued at 12 times expected earnings, their lowest price-to-earnings multiple since 2012, after falling more than 30% from their October record. Analysts expect October-quarter revenue to rise 92% year over year to an unspecified level and net profit to exceed $60 billion, up 89%.
1. Valuation hits a low
Nvidia shares are trading at 12 times expected earnings, their lowest valuation since 2012, after a steep drop from their October 6 record high. The stock is down more than 30% from that record and fell more than 5% on Thursday; it is down about 12% this week.
2. Leadership and AI concerns
The declines followed CEO Jensen Huang’s resignation and investor concerns about a possible slowdown in AI data-center construction. Chief Financial Officer Colette Kress is interim CEO while Nvidia seeks a permanent successor. Erik Kratz of Arena Private Wealth said the event was about a key person rather than demand, adding that stocks can take time to find a bottom after an abrupt CEO exit.
3. Earnings in focus
Nvidia reports quarterly results on Tuesday. Analysts on average expect October-quarter revenue to rise 92% year over year and net profit to exceed $60 billion, an 89% increase. Analysts have maintained forecasts for strong profit growth, expecting demand for Nvidia chips to outpace supply, while investors will be watching Kress’s outlook.
