NVIDIA's Valuation Hits Seven-Year Low: Is the Market Systematically Undervaluing AI's Biggest Winner?

NVIDIA, Microsoft, and Amazon—tech giants seen as the most direct beneficiaries of the artificial intelligence wave—are collectively seeing their stock valuations fall to multi-year lows. A rare valuation inversion is spreading through the market: the AI chip leader's price-to-earnings ratio is lower than that of Apple, whose growth rate is less than one-sixth of NVIDIA's.

According to The Information, as of Monday's market close, NVIDIA's stock price was $165.17, corresponding to a forward P/E ratio of just 19.9, the lowest in seven years. Meanwhile, Apple's forward P/E ratio stands at a high 28.7—while NVIDIA's revenue is expected to grow 71% in its current fiscal year, Apple's is only about 12%.

The market's collective repricing is partly attributed to the overall sell-off triggered by recent geopolitical shocks. However, analysts suggest that the general market decline is not enough to explain the extent of valuation compression for these high-growth tech stocks.

For institutions focused on AI-themed investments, the current valuation structure might signify a systemic mispricing, or it could indicate that market patience with the AI growth narrative is quietly waning.

NVIDIA: AI's Biggest Beneficiary, Yet Trading at 'Mundane Stock' Valuations

NVIDIA's current valuation level is unprecedentedly low in its nearly seven-year history. According to data cited by The Information from Koyfin, the stock's forward P/E ratio has dropped to 19.9, below Apple's 28.7, despite vast differences in growth prospects.

Based on data from S&P Global Market Intelligence, NVIDIA's revenue for the fiscal year ending next January is projected to grow by 71%, whereas Apple's revenue growth for the fiscal year ending in September is expected to be only about 12%.

In terms of monetization capabilities within the AI value chain, NVIDIA is by far the most direct and significantly benefiting enterprise; Apple, on the other hand, has gained minimally from the AI boom and has yet to show substantial contributions to its performance.

Yet, the market's pricing logic seems to ignore this reality. Investors are assigning a higher valuation premium to Apple while treating NVIDIA at multiples close to those of traditional manufacturing, a contrast that constitutes one of the most prominent valuation paradoxes within the current tech sector.

Microsoft and Oracle: A Decade-Long Valuation Gap Narrowing Sharply

Equally noteworthy is the significant narrowing of the valuation gap between Microsoft and Oracle.

Two years ago, Microsoft's forward P/E was 34 times, and Oracle's was 20 times; now, Microsoft has fallen approximately 26% year-to-date, with its forward P/E dropping to 20.4 times, while Oracle's is 18.5 times—their valuations are approaching each other for the first time in nearly a decade.

The fundamental logic supporting this repricing lies in the divergence of growth expectations. Analysts anticipate Microsoft's annual revenue growth rate to remain around 16% for the next few years, lacking clear signals of accelerated growth. In contrast, Oracle's revenue growth is expected to surge significantly from 8.4% in fiscal year 2025 to 46.5% in fiscal year 2028.

However, this comparison has important limitations. Oracle's scale is far smaller than Microsoft's, and it is heavily borrowing to fund its expansion, resulting in higher financial leverage and an undeniable risk premium. The Information refers to this structural difference as an "AI opportunity."

Amazon: Lowest Valuation Since Financial Crisis, Trading at a Discount to Walmart for the First Time

Valuation anomalies are not exclusive to NVIDIA. According to Koyfin data, Amazon's current P/E multiple is the lowest since the 2008 financial crisis; more unusually, Amazon's stock is trading at a discount to Walmart for the first time in history.

This phenomenon is also difficult to explain at the fundamental level. Amazon's annual revenue growth rate is approximately above 12%, while Walmart's is around 5%; furthermore, Amazon's strategic position in cloud computing and AI infrastructure is far from comparable to Walmart's.

This cross-sector valuation inversion reflects the current structural chaos in tech stock pricing.

The Information commented that if this is a "selective AI cautionary syndrome," its scope extends beyond chip stocks to cloud computing and e-commerce platforms, and it could potentially put pressure on the IPO pricing of AI unicorns like OpenAI and Anthropic.