Nvidia — the star of the S & P 500 in 2023 — enters 2024 even cheaper than it was a year ago. Shares of the chipmaker, which more than tripled this year, are now valued at roughly 25 times forward earnings, down from 34 at the end of 2022, according to FactSet data. The stock’s current earnings multiple also is well below its five-year average of 39. At one point in December, Nvidia hit its lowest price-to-earnings ratio since 2019. This is all despite the stock being the best-performer in the S & P 500 this year, advancing more than 239% as AI investments sent Nvidia’s revenue and profits soaring. It’s an improbable situation that reflects an overly pessimistic outlook for the leading AI chipmaker. Indeed, the valuation paints a picture of skeptical market — one in which investors are wondering whether the fervent demand Nvidia has seen since late 2022, when ChatGPT launched and sparked this AI investment wave, can be sustained through not just next year, but through 2025. Some also may fear Nvidia’s growth will be stunted by emerging competition in the AI chip market from the likes of Advanced Micro Devices , as well as technology giants like Microsoft who buy Nvidia’s chips and now also make their own . These concerns are unlikely to dissipate overnight. But, at this point, Nvidia’s current valuation simply appears too depressed for a company that “could have years of hyper growth ahead of it,” Jim Cramer said recently. “I think the stock is mispriced,” Jim said. “I continue to want to own Nvidia, not trade it.” Nvidia set its all-time high around $504 on Nov. 20, but retreated from there and closed as low as $455.03 per share Dec. 6. At $495 per share, the stock has mostly bounced back. Still, it’s trading at roughly the same price as it was in late August. Wall Street analysts remain optimistic on Nvidia. Ninety-four percent of the analysts who cover the chipmaker have a buy-equivalent rating on its stock, and the average price target of roughly $668…
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