Nvidia Stock Hasn’t Been This Cheap in 7 Years. Only 1 Explanation Makes Sense.

NVDA's trailing price-to-earnings ratio has dropped to 27x, its lowest reading since June 2019, even though the stock has nearly tripled and NVDA now ranks as the world's largest company by market cap.

The compression comes from earnings outrunning price. In Q2 FY2027, NVDA posted 106% year-over-year sales growth and 126% earnings growth. Because profit expanded faster than the share price climbed, the multiple contracted rather than expanded. Interpretation: the market is paying less per dollar of earnings today than it did at the 2019 trough, despite a far larger stock price and market value.

The bear case has specifics. Concerns center on the return on investment from AI infrastructure spending, and on rising competition from AMD and major cloud providers. The source notes that NVDA's growth trajectory continues to exceed analyst expectations, which means the current multiple reflects skepticism about durability rather than any visible slowdown in reported results.

One reading: a 27x multiple paired with 126% earnings growth leaves little room for the stock to look expensive unless growth decelerates sharply. Another reading: the market may be pricing in a peak-earnings scenario tied to AI spending sustainability, which would explain why the multiple sits at a seven-year low despite accelerating numbers.