Nvidia Stock Now Unusually Cheap Compared to Chip Index, Says Bernstein — What It Means for Investors

Nvidia stock is trading at one of its most attractive valuations in years when compared to the broader semiconductor market, according to a new analysis by Bernstein. The firm says the current price levels could signal a strong buying opportunity for long-term investors.

Bernstein analyst Stacy Rasgon noted that Nvidia is trading at nearly a 13% discount relative to the Philadelphia Stock Exchange Semiconductor Index (SOX) — placing it in the first percentile. “In the past decade, there have been only 13 days when Nvidia traded cheaper relative to the SOX than it does today,” Rasgon wrote.

Valuation at Rare Lows, Strong Returns Historically

Nvidia, a core player in the booming AI semiconductor market, is currently valued at around 25 times forward earnings. According to Bernstein, this multiple places the stock in the 11th percentile of its 10-year valuation range.

Rasgon added that buying Nvidia at or below these valuation levels has historically delivered exceptional returns. “Investors purchasing Nvidia shares under 25x forward EPS over the last 10 years have averaged 150% returns within a year, with zero instances of negative drawdowns over that period,” the note said.

Bernstein maintains an outperform rating on Nvidia with a price target of $275.

Stock Performance and Market Context

Nvidia gained 3% on Friday, though its performance over the past six months — up around 25% — has lagged behind the broader chip index, which has climbed 35% in the same period.

The analysis comes amid rising concerns about the future of the AI boom. Investors are questioning whether the massive capital being poured into AI infrastructure and computing power will continue, and if the returns will ultimately justify these investments.