--- title: "Performance skyrockets, valuation declines: Where will incremental funds come from when NVIDIA is treated as a value stock?" type: "News" locale: "en" url: "https://longbridge.com/en/news/277195674.md" description: "NVIDIA's stock price fell 5.5% on Thursday, marking the largest single-day decline since April 16, dragging down the S&P 500 index. Despite the company's performance exceeding expectations and analysts raising profit forecasts, its price-to-earnings ratio remains below the five-year average and close to the average valuation of the S&P 500. Investors' focus on financial data has weakened, raising concerns that spending by artificial intelligence developers may be reduced, impacting NVIDIA's revenue" datetime: "2026-02-27T12:12:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/277195674.md) - [en](https://longbridge.com/en/news/277195674.md) - [zh-HK](https://longbridge.com/zh-HK/news/277195674.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/277195674.md) | [繁體中文](https://longbridge.com/zh-HK/news/277195674.md) # Performance skyrockets, valuation declines: Where will incremental funds come from when NVIDIA is treated as a value stock? The Zhitong Finance APP noted that after Nvidia (NVDA.US) announced results that far exceeded expectations on Wednesday, it became one of the most growth-potential stocks in the market. However, why does its trading price look like that of a value stock? The chip giant's stock price fell 5.5% on Thursday, marking the largest single-day drop since April 16, and dragging the S&P 500 index down with it. The current price of the stock is about 22 times expected earnings, significantly lower than its five-year average of 37 times, and only slightly above the average valuation multiple of the S&P 500 index. As analysts raised their earnings forecasts based on Nvidia's first-quarter revenue expectations reaching $78 billion (far exceeding Wall Street's previous consensus expectation of about $73 billion), this price-to-earnings ratio is expected to decline further. "There is a disconnect between such strong performance and the lackluster stock price," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, which holds Nvidia shares. "You would certainly expect it to perform well after such a report. The company has shown very strong growth." Data shows that Nvidia's current price-to-earnings ratio is cheaper than about one-third of the stocks in the S&P 500 index, but its 65% revenue growth rate over the past 12 months ranks third in the index. In contrast, Palantir's revenue expansion ranks fourth in the S&P 500, while its stock price trading multiple is about 98 times expected earnings. ![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260227/1772192718794033.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Nvidia's sales growth is not enough to support its premium valuation The reason for the divergence between the chip manufacturer's performance and stock price trend is that investors are no longer focused on its financial data. Instead, Wall Street is concerned that the hundreds of billions of dollars in spending promised by AI developers like Meta, Alphabet, Microsoft, and Amazon will have to be scaled back. If this happens, it could heavily impact Nvidia's revenue. Daniel Pilling, portfolio manager at Sands Capital Management, which holds Nvidia shares, stated, **"This sell-off is entirely because the market is basically asking: Is this the peak?" "This sentiment has also seeped into the valuation multiples."** Before Nvidia announced its earnings report, the market was already uneasy about the AI sector due to concerns over the returns on massive spending and the disruptive threats posed by the technology, which had previously led to declines in the stock prices of software manufacturers and other companies. Paul Northrup, market strategist and senior wealth manager at Murphy & Sylvest Wealth Management, said, "This is a bit of a lose-lose situation for Nvidia; it almost doesn't matter what kind of performance it reports," **"Ultimately, when will we see a clear path to profits from all this capital expenditure?" "** In addition, there is another question: How much more upside is left for a stock that has risen nearly 1000% since the release of ChatGPT in November 2022? Jay Goldberg, a senior analyst at Seaport Group, stated, "Where is the next incremental buyer? All the major shareholders and long-only funds have already bought as much as they can, they have hit their limits," **he is the only analyst to give the stock a "sell" rating. "So even if it looks cheap, no one can really come in and pick it up cheaply."** Of course, Wall Street remains very optimistic about NVIDIA, as many market professionals believe that the stock's current trading multiples are among the lowest since the "tariff panic sell-off" in April last year, making it highly valuable. The stock has been stuck in a narrow range due to investors selling off large tech stocks and moving into sectors currently considered lower risk. "NVIDIA does indeed look like a value investment opportunity," said Tejas Desai, a research analyst at Global X. "The stock price is being punished by position adjustments and sector rotation, rather than deteriorating demand." The combination of expected growth and value may suggest that investors should view NVIDIA as a "growth at a reasonable price" option, a strategy commonly used on Wall Street. "These results indicate that the stock represents very good value and opportunity at this valuation multiple," said Pavlik from Dakota. "When you look at the fundamentals, valuations, and key metrics, all of these are loudly reminding you: this is a great-looking stock that should be part of your portfolio." While NVIDIA's current price-to-earnings ratio may not fully align with those of other high-growth companies, Pilling from Sands Capital is reluctant to view it as a value stock, as it does not behave like one. "It doesn't trade like a value stock," he said. "Its volatility is much greater." ![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260227/1772192699578875.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Software stocks have finally regained some ground Data shows that an exchange-traded fund (ETF) tracking the U.S. software industry is poised to achieve its first weekly performance exceeding the Philadelphia Semiconductor Index since mid-December. On Thursday, as investors rotated out of NVIDIA and companies providing AI infrastructure, software stocks regained some ground. 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