Nvidia Shares Slip After Record Earnings as Analysts Flag Low Valuation

TL;DR: Nvidia (NVDA) dropped 1.2% to $216.26 after its latest earnings beat, yet a forward price‑to‑earnings ratio just above 22 suggests the stock is undervalued compared with Intel and AMD.

Context Nvidia posted an 85% year‑over‑year revenue jump in Q1 and raised guidance for the current quarter, extending a 14‑quarter streak of beating Wall Street forecasts on both revenue and operating income. Despite the strong numbers, the shares slipped 1.8% on Thursday and another 1.2% on Friday, reflecting investor caution after a two‑year rally that lifted market value past $5 trillion.

Key Facts - The forward P/E ratio—expected price divided by projected earnings—now sits just above 22, far lower than Intel’s roughly 95 and AMD’s near 47. This metric signals how much investors are willing to pay for each dollar of future earnings. - Analysts maintain a bullish consensus: about 93% of coverage firms rate the stock as a Buy, and the average price target has risen to $294. - Wolfe Research senior analyst Chris Caso told CNBC that Nvidia’s valuation is “unreasonable” because it trades at a discount to most AI peers, even as the company adds major customers like Anthropic. - Roughly half of Nvidia’s revenue now comes from hyperscale cloud providers, with the remainder supplied by sovereign AI projects, enterprises, and firms that rely on Nvidia’s integrated hardware‑software stack. - Wall Street firms such as Needham, Baird, Goldman Sachs and Morgan Stanley lifted their price targets after the earnings release, citing strength in the Data Center segment and growth potential in the upcoming Vera CPU architecture, which could generate about $20 billion in CPU revenue by fiscal 2027.

What It Means The modest price decline masks a shift in perception: investors are beginning to view Nvidia’s sky‑high valuation as misaligned with its growth outlook. A forward P/E near 22 places the stock on a cheaper footing than its main chip rivals, suggesting room for price appreciation if earnings continue to accelerate. However, Caso warns that custom AI chips from cloud giants could erode market share, a risk that may temper enthusiasm.

Looking ahead, the market will watch Nvidia’s ability to convert its data‑center momentum into broader CPU sales and to retain hyperscaler business amid rising competition. The next earnings report will test whether the current discount translates into higher returns for shareholders.