Nvidia (NVDA.US) is at a ten-year low valuation compared to the semiconductor index! Bernstein said the average return on purchases at this time was over 150%

The Zhitong Finance App learned that Bernstein's latest research report indicates that the current valuation level of Nvidia (NVDA.US) compared to the Philadelphia Semiconductor Index (SOX.US) is in a very attractive range. Whether judging from relative valuation or absolute valuation, it provides a favorable foundation for future stock price returns.

Bernstein analyst Stacy Rasgon wrote in the report that compared with the Philadelphia Semiconductor Index, Nvidia's current transaction price has a discount of about 13%, which is at the 1st percentile of the historical valuation distribution. “In the past 10 years, Nvidia's valuation relative to the SOX Index was only 13 trading days lower than the current one.”

As a core beneficiary of the artificial intelligence market, Nvidia's current stock price is about 25 times the expected profit for the next year. Rasgon said that for the company, the 25x forward-looking price-earnings ratio means that its valuation is only at the 11th percentile of the past 10 years, at a historically low level.

The report further points out that this valuation level is not only “quite cheap” in the absolute sense, but also has high return potential in terms of historical experience. Rasgon said that in the past 10 years, any investor who bought and held Nvidia's valuation for 1 year when its valuation was less than 25 times, had an average return of over 150%, and there were no one-year holding losses in the statistical sample. Bernstein currently gives Nvidia an “outperforming market” rating, with a target price of $275.

In terms of stock price performance, Nvidia rose more than 3.9%% on Friday. The stock's cumulative increase over the past six months was about 25%, still lagging behind the overall increase of the Philadelphia Semiconductor Index of about 35% during the same period.

Bernstein's opinion comes at a time when the market is discussing the sustainability of the AI investment cycle. Some investors are beginning to question whether high-intensity AI computing power capital expenditure can bring matching returns, which has also put pressure on recent valuations of AI core targets, including Nvidia.