Nvidia's Cheap Multiple Is Only Half the Story
Published on 10/25/2026 at 05:51 | Editorial boerse-global.de
Nvidia's shares now trade at a meaningful discount to their own history. A valuation published today puts the price-to-earnings ratio for fiscal 2027 at 23, against a five-year average of 33.4. That is a cheaper entry point than investors have grown used to. Whether it is a genuine opportunity depends entirely on whether the earnings growth baked into that number actually shows up.
The gap between a lower multiple and a margin of safety is where the real debate sits. Nvidia's valuation rests on very large future profits. If those disappoint, even a modest-looking P/E loses its power to reassure.
The growth case is already on the books
Operating momentum has so far backed the bulls. Revenue climbed 96% to $177.8 billion in the first half of fiscal 2027. The multiple is therefore not pricing a distant breakthrough alone — it sits on top of a business that is already expanding fast.
So the discount to the historical average arrives alongside a sharp widening of the top line. That combination appeals to investors betting on more growth to come. What the historical comparison cannot answer is how long Nvidia can sustain this pace.
Should investors sell immediately? Or is it worth buying Nvidia?
Analysts forecast earnings growth of 71% for Nvidia next year. For S&P 500 companies, the equivalent expectation is 16%. Those projections explain why a multiple built on forward profits can look far lower than one based on results already delivered.
The direction of the arithmetic matters. Low multiples do not create high earnings; high earnings estimates push multiples down. Anyone judging the stock on this metric has to examine the expectations underneath it.
Orders are not the same as deliveries
Demand, meanwhile, keeps outrunning what Nvidia can supply. Reuters reported on Tuesday that ByteDance, Alibaba and Tencent have placed orders for more than 3 million RTX PRO 5500 graphics cards, with a combined list value above $35 billion. Nvidia has told customers it cannot guarantee it will fill those orders, according to the report, because demand exceeds planned production.
For shareholders, that distinction is critical: the reported volume signals appetite, not confirmed shipment. Capacity work is under way — on Wednesday Nvidia announced agreements to lift substrate capacity 2.5-fold over three years, including a $1.1 billion prepayment to reserve capacity at new KYEC test facilities in the US. More capacity can improve the conditions for delivery. It does not settle how controlled chips reached the locations named in a separate report.
A network finding, not a sales trail
That report came Friday from Israeli security firm Lava, which said it had identified 32 Nvidia Blackwell Ultra B300 chips inside China Telecom's network. The finding throws a spotlight on the diversion of controlled US products. Nvidia's response pointed to the small scale of such cases in recent court proceedings, where it said diversion amounted to "less than half a percent."
The two statements answer different questions. Lava describes where chips were found in use; Nvidia's figure sizes diversion through the lens of litigation. Neither establishes a direct sale by Nvidia or any particular distribution channel. Investors should treat the deployment question and the capacity question as separate threads rather than one risk.
Nvidia at a turning point? This analysis reveals what investors need to know now.
Customers building their own silicon
Competition adds another layer. Amazon has unveiled a software tool that lets its Trainium AI chips run code in the most widely used AI programming language without modification. Alphabet now sells its own AI chips directly to businesses as well.
None of this signals an imminent loss of Nvidia's position — Amazon still buys Nvidia chips. But it shows that investors must watch the competitiveness of individual offerings, not just overall AI demand. A growing market does not guarantee unchanged market share.
The next checkpoint is the quarterly report on November 18. For the third quarter of fiscal 2027, Nvidia has guided to revenue of $108 billion at the midpoint. That gives the valuation debate something concrete to test. Reported sales will matter, but so will the signals on demand ahead. A lower multiple is an argument for the stock — it is not a substitute for proof that the business can keep meeting lofty expectations.
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