September 14th
$NVDA
Nvidia's forward P/E fell to 15.75, the least since February 8, 2016 and a fraction of the over 65x at its peak in November 2021. The multiple is half what it was a year ago, and down from more than 25 times as recently as May. It has since traded up to 16.79 following a six-day rally of around 7.5%. The derating this year has come even as shares are up 22% in 2026, the second-best among the Magnificent Seven after Apple Inc.’s 25% gain. But Nvidia’s revenue and net income are expected to jump 90% and 99%, respectively, in fiscal 2027, which ends in January. That’s up from 65% growth for both metrics the year before. “It is prudent to take a step back and ask whether all this spending is sustainable, because trees don’t grow to the sky,” said Eli Horton, senior portfolio manager for thematic equities and durable growth equities at TCW. “However, Nvidia’s multiple really seems predicated on a slowing in AI capex, which would have to come either on hyperscalers pulling back, or a regulatory framework that delays or shuts things down.”