A Bernstein analyst looks at several valuation metrics that are near 10-year lows and deems Nvidia’s stock ‘increasingly attractive’

Nvidia Corp.’s stock looks especially enticing in light of its recent selloff, according to a Bernstein analyst.

Shares of Nvidia fell 8.7% in Monday trading, and they’re off 15% to start the year. But that means the stock now stands out on several components of valuation, Bernstein’s Stacy Rasgon wrote.

The shares turned positive in morning trading on Tuesday, erasing earlier 3% losses.

For one, Nvidia’s stock is now trading at just a “slight premium” to the S&P 500, and its lowest such premium since 2016. The stock is also trading “below parity” versus the PHLX Semiconductor Index, something that Rasgon noted has only happened one or two times in the last 10 years. Per his relative basis, Nvidia shares are near decade lows.

Nvidia’s stock looks attractive based on several relative multiples, according to an analyst.

What’s more, Nvidia’s stock currently trades at roughly 25 times forward earnings, the lowest such multiple in a year and near decade lows, Rasgon added. “Investors have historically done well to buy the stock at 25x or lower,” he noted.

And those data points don’t take into account where Nvidia currently stands with its business. “The de-rating feels a little stunning especially right at the start of a product cycle,” Rasgon wrote. Nvidia had some early hiccups with its new Blackwell product but appears to have gotten past the issues.

In his view, “the floodgates are now open” for this product, given that the company shipped $11 billion worth of Blackwell product last quarter and should benefit going forward as customers continue to ramp their capital spending.

Admittedly, there’s an emerging risk on the regulatory front, according to Rasgon. In a last-gasp January move, the Biden administration put new restrictions on artificial-intelligence-chip sales to China, and those rules are slated to take hold in May. Further, investors are getting worried about the process of even further restrictions on sales in China.

Rasgon argued that “an H20 ban would make zero sense” as it would “simply hand the Chinese AI market to Huawei,” but there’s uncertainty about how the Trump administration will act given that it’s “not necessarily known for nuance.” The H20 is a chip that Nvidia sells in China to comply with performance restrictions.

While the regulatory climate is something to monitor, Rasgon thinks “worries that the AI trade is ‘over’ feel a little premature to us,” while Nvidia’s stock valuation now looks “increasingly attractive.” He rates the stock at outperform with a $185.

“Sentiment has clearly pivoted for now on the AI group,” he wrote. “However, spending intentions seemingly continue to rise, a product cycle is just kicking off, and we have GTC coming in a few weeks.”