MW Nvidia's stock is cheap by this account. Can next week's GTC get it going again?

By Emily Bary

Nvidia hosts its annual conference next week at a time when investors have soured on AI stocks

Depending on how you look at it, Nvidia Corp.'s stock can be seen as quite cheap, according to a Melius Research analyst.

The semiconductor stock has a forward multiple of price to earnings that's 41% below where it was the day that ChatGPT made its debut in late 2022, noted Melius' Ben Reitzes. That comes against the backdrop of a 788% rise in Nvidia's $(NVDA)$ net income for fiscal 2025 relative to fiscal 2023 levels.

"Just doesn't feel right, does it?" Reitzes asked.

He pointed to an encouraging historical parallel. Apple Inc.'s stock saw its forward multiple fall from 33 times on the day of the first iPhone launch to 15 times at the end of 2008, as the financial crisis took its toll.

"As you know, the mobile trend didn't end then - and Apple now trades at 31x earnings on much larger numbers (benefiting from its durable installed base and huge services business)," Reitzes wrote. "If Nvidia duplicates its own version of this industry stewardship, we could look back at this period of uncertainty and have a good chuckle."

See also: Is the chip sector having a meltdown? By this measure, it's mostly just Nvidia.

Nvidia is due to host its annual GTC conference for developers next week, and Reitzes wondered if Chief Executive Jensen Huang will calm investors' nerves. Admittedly, Reitzes isn't sure that the company will be able to soothe many of Wall Street's near-term fears, which include potential negative impacts from tariffs and further restrictions on sales to the China market.

Instead, GTC is likely to have a more big-picture focus, on areas such as the opportunities in robotics, artificial-intelligence software, autonomous driving and drug discovery. "To all these long-term themes, we think Jensen can hit it out of the park," Reitzes wrote.

GTC should also refocus attention on Nvidia's product road map going out several years. For instance, Reitzes is looking for Nvidia to discuss the memory boost expected from its Blackwell Ultra product and preview what's to come with the Rubin chip family in 2026, before teasing its 2027 plans.

"We expect significant improvements in speed, memory and power that will become even more needed in the future," Reitzes wrote. "These products should excite partners at the conference ranging from Microsoft to Dell to sovereigns, which normally would please investors (at least if it was last year)," he added.

Whether that's enough to satisfy Wall Street this time around remains to be seen, given the tough climate for AI stocks. From peak to trough, the VanEck Semiconductor ETF SMH is seeing its steepest drop since a stretch that ended in 2022, Reitzes noted.

Nvidia shares are down 2% in premarket action Monday and off 16% over the past month.

Read: Nvidia's stock selloff deepens after Marvell earnings

-Emily Bary

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March 10, 2025 08:16 ET (12:16 GMT)

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