Nvidia Stock Trades At 13% Discount To Long-Term Average, Other AI Stocks At 52% Premium

Zinger Key Points
  • Amidst a relatively stable macro backdrop, certain sectors face headwinds while others exhibit divergence, particularly those related to AI.
  • In an interesting revelation, Nvidia stock is trading at a 13% discount to its 5 year average multiple, Supermicro stock at a 169% premium.

Nvidia Corp NVDA traded 13% below its five-year average as of April 9 while nine other artificial intelligence-related stocks were trading above their five-year average.

The AI average of all 10 stocks is trading at a 52% premium, according to an analyst note from JPMorgan‘s Samik Chatterjee, citing data from Bloomberg.

See below.

Table source: JPMorgan analyst note

As can be seen in the table above:

  • Super Micro Computer SMCI leads the pack with its stock price trading at a 169% premium to its long-term average.
  • Dell Technologies DELL follows next at 151% premium
  • Lumentum Holdings LITE follow at 142%
  • Marvell Technologies MRVL at 82%.

Also Read: Which Is The Most Undervalued AI5 Stock Right Now?

AI Stock Positioning Earnings

Despite the sector’s growth prospects, AI stocks, on average, are trading at a 52% premium to their long-term valuation multiples.

For context, the S&P 500 Index, considered a barometer of the U.S. stock market, is currently 11% above its long-term average.

By that measure, Nvidia, trading at 13% below its 5-year average forward P/E multiple — appears to be a great pick. Advanced Micro Devices AMD and Arista Networks ANET at 27% and 31% premium, respectively, may also be offering better value than other AI stocks (ex-Nvidia).

The premium on AI stocks’ multiples right now, is definitely a dampener on enthusiasm for favorable positioning into earnings.

As investors brace for first-quarter earnings, navigating macro headwinds and sector-specific dynamics is crucial. JPMorgan’s insights shed light on potential opportunities and challenges in the AI sector, guiding investors in optimizing their portfolios amidst evolving market conditions.

Read Next: Apple’s AI ‘Upgrade Cycle To Be Driven By iPhone 17’: Analyst Outlines 3 Reasons Why

Image: Shutterstock

Market News and Data brought to you by Benzinga APIs
Price Target
Posted In: Analyst ColorLong IdeasTop StoriesAnalyst RatingsTechTrading Ideasartificial intelligenceExpert IdeassemiconductorsStories That Matter
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!