Nvidia’s stock has dropped this year, making it one of the cheaper options among its tech rivals.
While many investors are concerned about increasing competition and potential trade policy effects, others see it as a strong buying opportunity.
The stock market’s AI darling has dropped 14 per cent in 2025, bringing its valuation down to 23.3 times forward earnings.
That is lower than its five year average of 40 times, and largely below where it was trading at the start of the year (31.2 times).
This decline followed a broader tech selloff, with the Nasdaq Composite down 8.7 per cent this year, due to economic headwinds and Trump’s potential US tariffs on semiconductors.
Among the Magnificent Seven, the global group of leading tech titans, just Alphabet is trading at a lower multiple, at 17.9 times.
Nvidia’s decline in stock price has driven its valuation down.
The company is now valued below various leading tech stocks like Broadcom (27 times), Intel (31 times) and Palo Alto Networks (51 times).
It is even less expensive than several consumer staples firms like Walmart and Airbnb.
Analysts see a buying opportunity
Analysts have argued that Nvidia’s lower valuation has made it an attractive investment.
Nancy Tengler, chief executive of Laffer Tengler Investments, said: “the AI trade isn’t over, and Nvidia continues to be the leader.”
“Nvidia looks cheap relative to its own history. This has historically been a good entry point”.
Wells Fargo analyst Aaron Rakers has also said he sees potential upside, noting that Nvidia shares are currently trading at a 35 per cent discount to their median earnings multiple across the last three years.
He reported that historically, Nvidia has successfully outperformed the Philadelphia semiconductor index following pivotal industry events.
This bodes well for the chip maker’s annual GPU Technology Conference (GTC) next week, where chief executive Jensen Huang is expected to unveil its next generation AI chips.
Competition and tariff risks
Despite its lower valuation, risks for the stock remain.
AMD and other burgeoning rivals are pushing into the AI chip market, and a slowdown in AI data centre spending could also influence Nvidia’s revenue growth.
DeepSeek’s recent boom also sent shock waves through the artificial intelligence (AI) sector, notably causing Nvidia’s largest single-day market cap loss in history.
Trade policy is another concern.
Melius Research analyst Ben Reitzes argued that AI chip stocks were under pressure due to “potential tariffs, regulations, bans, and innovations that make computing cheaper.”
“There are a lot of rumours that tariffs will cause the economy to implode and all chip stocks to crash”, he said. “It’s blatantly false”.
Investors will be keeping a close eye on Nvidia’s GTC conference for further guidance on its growth outlook.