Nvidia - the stock market's AI darling - is not only cheap in historical terms, but it is notably less expensive than some other stocks you might not expect.
Nvidia stock is one of, if not the most, frequently discussed artificial-intelligence trades on Wall Street. Its AI chips are the most popular, which lifted sales 114% to $130.5 billion in fiscal 2025 from the prior year. Hope for that kind of runaway growth lifted the price to 62.65 times forward earnings on May 18, 2023, though even that was far below the record of 125.91 in May 2009.
Now, opinions appear to have changed. The stock has fallen 14% this year, partly because President Donald Trump's trade policies and cuts to government employment have raised fear of a recession. That has sent investors away from riskier investments, including previously high-performing tech stocks.
The Nasdaq Composite has dropped 8.7% in 2025. Nvidia investors are also nervous about potentially tighter controls on chip exports.
With the decline in the stock price, Nvidia's valuation has come down. The stock is currently trading at 23.3 times the per-share earnings expected over the next 12 months, which is below its five-year historic average of 40 times and a drop from the 31.2 times it was trading at on Jan. 1, according to Dow Jones Market Data.
Now, the chip stock is cheaper than shares in a surprising variety of other companies. To begin with, Nvidia is the second-least expensive member of the Magnificent Seven, the tech stocks that led the AI rally in late 2022, 2023, and 2024. Only Alphabet is cheaper, trading at 17.9 times forward earnings.
Plenty of other tech stocks are more expensive. They include Accenture, which is trading at 24.5 times; Broadcom, at 27 times; Intel, at 31 times; Texas Instruments, at 31.2 times; Netflix at 34.6 times, Palo Alto Networks at 51.2 times; and CrowdStrike Holdings, at 90.7 times.
Nvidia is also cheaper than several consumer staples companies, including Estée Lauder at 33.5 times; Walmart, at 32.8 times; Monster Beverage, at 29.6 times; Airbnb at 27.9 times; McCormick, at 26.5 times; and Procter & Gamble, at 23.9 times.
In the consumer discretionary sector, Nvidia is less expensive than Chipotle Mexican Grill, at 37.2 times; Starbucks, at 30.5 times; Yum! Brands, at 25.4 times; and Tractor Supply, at 24.4 times.
Nvidia's lower valuation means that there are some on Wall Street who are concerned about Nvidia's future earnings growth. The chip maker reported adjusted earnings of $2.99 a share for fiscal 2025 on Feb. 26.
That was a 130% increase from the previous year. That spectacular earnings growth could be at risk if chip companies such as Advanced Micro Devices win a bigger share of the market, or if growth in spending on the data centers that make AI possible slows.
But nothing is set in stone. Some experts think now is the time to buy a stock that could continue to be a major beneficiary as companies continue to invest heavily in AI.
The "AI trade isn't over, and Nvidia continues to be the leader," Nancy Tengler, CIO and CEO of Laffer Tengler Investments, wrote on Wednesday. "NVDA looks cheap relative to its own history. This has historically been a good entry point."