Yahoo Finance reported on February 13 that Nvidia’s stock price is significantly undervalued, presenting a prime buying opportunity for investors.
On that day, as artificial intelligence (AI) related concerns continued to ripple through the New York stock market, Nvidia’s shares dipped 2.21%. All of the Magnificent Seven tech stocks in the U.S. saw declines, with the exception of Tesla, which managed a slight 0.09% uptick.
The unease surrounding AI innovation has spread beyond software, infiltrating real estate, trucking, and financial services sectors. The media industry wasn’t spared either, with shares of The Walt Disney Company and Netflix taking substantial hits.
As a result, six out of the seven major tech stocks tumbled. This downward trend isn’t isolated to just one day; these tech giants have been struggling to gain traction since the year began.
Consequently, the price-to-earnings ratios (PER) of these tech behemoths have taken a significant nosedive.
Notably, Nvidia’s forward PER now stands at a mere 25. Art Hogan, a strategist at investment firm B. Riley, told Yahoo Finance that Nvidia’s current forward PER of 25 is at its lowest point in three years.
He added that this figure aligns with the average PER on the Nasdaq.
He also emphasized that Nvidia is likely to raise its revenue forecast in its upcoming earnings report, which could drive the forward PER even lower.
Nvidia is scheduled to release its earnings on February 25.
Adding fuel to the fire, recent reports suggest that major U.S. tech companies plan to pour over 700 billion USD into AI initiatives this year alone.
These tech giants have recently unveiled their AI investment strategies during earnings calls. Amazon, for instance, announced plans to invest a whopping 200 billion USD in AI this year.
Alphabet isn’t far behind, disclosing plans to funnel between 175 billion USD and 185 billion USD into AI research and development.
Meta has earmarked between 115 billion USD and 135 billion USD for AI spending, while Microsoft plans to invest 145 billion USD in the current fiscal year.
The AI investment frenzy isn’t limited to these companies; others are following suit, pushing the total projected investment to around 700 billion USD.
Jensen Huang, Nvidia’s Chief Executive Officer (CEO), recently confirmed that demand for AI-specific chips continues to outstrip supply.
Nvidia stands to be the primary beneficiary of this AI investment boom, with its revenue expected to skyrocket in the coming quarters.
In light of these factors, Yahoo Finance suggests that Nvidia’s stock is significantly undervalued, making it an attractive buy for savvy investors looking to capitalize on the AI revolution.