$NVIDIA(NVDA.US)Context: Amid a concentrated selloff in AI stocks, Nvidia's valuation has fallen to levels not seen in y…

$NVIDIA(NVDA.US)

Context: Amid a concentrated selloff in AI stocks, Nvidia's valuation has fallen to levels not seen in years. The company's 12-month forward P/E ratio is currently about 11.7x, marking its lowest level since October 2011 and falling below 12 times for the first time since 2012. In comparison, the S&P 500 Index's forward P/E ratio remains near 18 times. However, a declining valuation does not necessarily mean the stock is cheap. Even as the stock price falls, Wall Street still maintains high expectations for the company's future earnings; if AI capital expenditures, data center construction, or profit margins fall short of forecasts, the currently seemingly cheap valuation could rise rapidly.The controversy surrounding Jensen Huang has added key-person risk to Nvidia, a factor that was historically rarely priced in by the market. Huang is not only the company's co-founder, but also the core decision-maker behind its product roadmap, customer relationships, industry investments, and AI strategy. Nvidia has long maintained a flat management structure, and the market has yet to see a clear successor capable of immediately stepping in. If the investigation ultimately does not affect his position or ability to perform his duties, the recent selloff is likely more of a short-term sentiment shock. Nvidia's advantages in its CUDA ecosystem, GPU performance, networking products, and customer base will not immediately vanish due to management controversy.

My Trade: I am patiently waiting for the $159 level before buying, although there is currently strong support levels at mid $160s

Takeaway: Nvidia's announced cumulative share repurchase authorizations total approximately $230 billion, providing the company with a capital buffer during periods of stock price weakness.