It's been a brutal few weeks for Nvidia (NVDA -4.34%) investors. After reaching an all-time high of roughly $243 per share in early October, the artificial intelligence (AI) chipmaker has experienced an epic sell-off.
On Nov. 12, Nvidia stock crashed as low as $148.80 following the resignation of CEO Jensen Huang. Huang's departure follows revelations concerning two extramarital relationships, including one involving a woman suspected of ties to Chinese intelligence. Nvidia's board of directors has been investigating the allegations, which have not established that Huang compromised company secrets.
Chief Financial Officer (CFO) Colette Kress is now serving as interim CEO while Nvidia searches for a permanent replacement. The uncertainty has rattled investors. However, the resulting sell-off has created an interesting valuation opportunity.
Nvidia stock is trading at one of its cheapest valuations in more than a decade. Here's why I think the recent decline could represent a compelling buy-the-dip opportunity.
NVDA - Nvidia
$166.19-$7.54 (-4.34%)
NASDAQ · As of 4:00 PM ET 11/12/26
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Key data points
Market capMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.$4.01T
Day's range$148.80 - $167.14
52wk range$148.80 - $243.37
Volume747.7M
Avg volume141M
Gross margin74.67%
Dividend yield0.31%
Nvidia's valuation is dirt cheap
One useful valuation metric for evaluating a growth stock is the forward price-to-earnings (P/E) ratio. This tool compares a company's current share price with analysts' expectations for its earnings over the next 12 months. Simply put, a lower ratio means investors are paying less for each dollar of anticipated profits.
As of this writing (Nov. 12), Nvidia's forward P/E hovers around 11, according to data from Yahoo! Finance. This is the lowest reading dating back to May 2016, according to data compiled by TradingView.
For perspective, Nvidia traded near 90 times forward earnings in late 2021. Nvidia has become a much larger and more profitable business since then, and yet investors are now assigning it a fraction of its former earnings multiple.
Of course, a lower multiple does not necessarily mean a stock is undervalued. If Nvidia's future earnings disappoint, today's seemingly attractive valuation could prove misleading. Nevertheless, the historical comparison suggests investors are pricing in considerable uncertainty about the company's future.
Nvidia's earnings growth makes its valuation attractive
Despite Nvidia's cratering stock price, its latest financial results show little evidence of deteriorating demand. During its fiscal second quarter of 2027, Nvidia generated $96.2 billion in revenue, representing a 106% increase year over year. The data center business contributed $89 billion, growing 117% annually. Meanwhile, adjusted earnings per share surged 120% to $2.22.
These results reflect the enormous spending on AI infrastructure from Microsoft, Amazon, Alphabet, Meta Platforms, Oracle, Anthropic, and OpenAI. Nvidia's Blackwell GPUs are central to many hyperscale projects, while its new Vera Rubin architecture is entering production. The company is also expanding into Vera CPUs, high-speed networking equipment, and specialized AI inference accelerators.
Importantly, Nvidia expects its momentum to continue. Management's guidance for the fiscal third quarter calls for $108 billion in revenue, plus or minus 2%. That would represent roughly 89% growth compared with the same quarter last year.
Nvidia is scheduled to report those results on Nov. 17. If the company delivers another strong quarter and maintains an encouraging outlook, investors may begin reassessing whether its valuation profile accurately reflects its growth trajectory.
Is Nvidia stock a buy after Jensen Huang's resignation?
There's an important distinction between an undervalued stock and a risk-free investment. Huang was instrumental in developing Nvidia's technology roadmap, forging customer relationships, and building its competitive advantages.
Competitors such as Advanced Micro Devices and Broadcom are working to capture more AI infrastructure spending. Furthermore, many of Nvidia's largest customers are developing custom silicon, potentially reducing their dependence on the company's GPUs over time.
Nevertheless, Nvidia's moat isn't going to crack just because of a leadership transition. The company's CUDA software ecosystem, advanced chip designs, networking technology, and customer relationships help form strong barriers to competition.
At roughly 11 times forward earnings, I think Nvidia's recent decline has created a unique opportunity for long-term investors. To me, Nvidia offers an unusually compelling combination of growth and valuation.
