NVIDIA Corporation (NVDA.US) relative to the semiconductor index is at a ten-year low in valuation! Bernstein says that buying at this time will yield an average return rate of over 150%.

Bernstein's latest research report pointed out that NVIDIA Corporation (NVDA.US) is currently trading at an extremely attractive valuation level relative to the Philadelphia Semiconductor Index (SOX.US), providing a favorable basis for future stock price returns, both in terms of relative valuation and absolute valuation. Bernstein analyst Stacy Rasgon wrote in the report that compared to the Philadelphia Semiconductor Index, NVIDIA Corporation is currently trading at a discount of about 13%, placing it in the 1st percentile of historical valuation distribution. "In the past 10 years, there have only been 13 days when NVIDIA Corporation traded at a lower valuation relative to the SOX index." As a core beneficiary of the artificial intelligence market, NVIDIA Corporation's current stock price is about 25 times its expected earnings for the next year. Rasgon stated that for this company, a forward price-to-earnings ratio of 25 times means that its valuation is only in the 11th percentile of the past 10 years, at historically low levels. The report further pointed out that this valuation level is not only "quite cheap" in absolute terms, but also has high potential for returns based on historical experience. Rasgon stated that in the past 10 years, investors who bought and held NVIDIA Corporation when the valuation was below 25 times earnings for one year had an average return rate of over 150%, with no instances of losses in the one-year holding period in the sample. Bernstein currently gives NVIDIA Corporation an "outperform" rating with a target price of $275. In terms of stock performance, NVIDIA Corporation rose over 3.9% on Friday. The stock has accumulated a gain of about 25% over the past six months, still lagging behind the overall gain of about 35% for the Philadelphia Semiconductor Index during the same period. At the time of the release of Bernstein's above opinions, there is increasing discussion in the market about the sustainability of the investment cycle in artificial intelligence. Some investors are starting to question whether the high-intensity AI computing capital expenditure can bring returns that match it, putting pressure on the valuation of core AI assets including NVIDIA Corporation.