Doha [Qatar], March 31: As global stock markets tumble over deepening worries about war in the Middle East, Nvidia, the world's most valuable company, finds itself trading at its cheapest price-to-earnings multiple since before ChatGPT kicked off the AI boom. The steep drop in Nvidia's PE suggests the dominant AI chipmaker's shares may be a bargain, but one tied to risks and uncertainty that have shaken investors' confidence in the so-called AI trade that has driven Wall Street higher in recent years.
Shares of Nvidia have tumbled nearly 20 percent from their record high close in October, with the company caught up in a broad market selloff over fears that the US and Zionist entity war on Iran will keep oil prices elevated and fuel a wave of inflation that could force central banks to raise interest rates. The stock fell 2.2 percent on Friday, reflecting declines across Wall Street, and it is on track to lose about 10 percent for the first quarter.
Investors have also worried in recent months that heavy spending on AI infrastructure by Microsoft, Alphabet, Amazon and other Nvidia customers may be taking longer than expected to pay off with increased revenue and profits. These combined concerns have bled over $800 billion from Nvidia's stock market value, now at about $4 trillion, even as the Silicon Valley company reported successive quarters of climbing gross margins, now at 75 percent, and as analysts raised their estimates for future earnings growth.
Nvidia's shares are now trading at about 19.6 times its expected 12-month earnings, their lowest valuation since early 2019, a year before the coronavirus pandemic and four years before OpenAI's launch of ChatGPT ignited a rally in the shares of Nvidia and other AI-related stocks.
Source: Qatar Tribune
