When Nvidia (NVDA) reports its latest earnings on May 20, it will likely do so with its stock trading at some of the lowest valuation levels in recent memory.
Nvidia stock is trading 10x below its three-year median price-to-earnings ratio of 32x, Goldman Sachs analyst James Schneider pointed out in a new note on Friday. He added that the stock is also trading at a steeper discount to peers versus historical levels (see chart below).
What’s up with Nvidia’s stock: Nvidia’s once-Teflon stock has recently entered a period of relative stagnation, lagging behind the broader tech indexes as investors grapple with artificial intelligence exhaustion and shifting market dynamics. Major customers have significantly ramped up the deployment of their own custom AI silicon, including Amazon (AMZN) (Trainium/Inferentia), Google (GOOG) (TPU), and Microsoft (MSFT) (Maia). This insourcing trend is beginning to signal a long-term peak in demand for Nvidia’s high-margin H200 and Blackwell chips.
Shares of Nvidia are up 13% this year, underperforming Advanced Micro Devices’ (AMD) 90% gain and Intel’s (INTC) 197% advance.
Goldman Sachs stays bullish: Schneider reiterated a Buy rating on Nvidia and a $250 price target. But he did jack up his earnings per share estimate by an average of 12%.
Schneider explained, “We expect investors to focus on: (1) the magnitude of upside to Nvidia’s $1 trillion datacenter guidance at GTC; (2) potential upside from agentic AI to the server CPU business; (3) competitive dynamics; (4) gross margin outlook given rising input costs. We expect a beat-and-raise quarter given positive industry supply and demand datapoints but believe the bar for stock outperformance is relatively high heading into the print.
“Although the stock has lagged peers and now trades at a meaningful discount relative to history, we believe the stock’s multiple can re-rate if we see evidence of: (1) improving profitability metrics at hyperscalers that supports sustained spending growth; (2) proliferation of agentic AI signaling broader enterprise adoption; (3) more visibility into deployments at non-traditional customers.”
The bottom line: It’s darn near impossible to bet against Nvidia given its leadership position in the AI boom. But that doesn’t mean CEO Jensen Huang can mail it in on earnings days. The Street wants to be wowed on May 20. If it isn’t, expect the stock to get cheaper.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.













