Despite being a central player in the artificial intelligence revolution, Nvidia's shares have lagged behind broader AI-related gains, prompting analysts to highlight a compelling entry point for investors. The divergence between the company’s market performance and its dominant tech position has sparked renewed interest.
- Nvidia's stock declined 12% in three months, while the AI-focused Nasdaq CTA Index rose 28%
- Q4 revenue: $26.9 billion, up 37% YoY, driven by AI chip shipments
- Nvidia holds over 80% of the high-performance AI chip market share
- Forward P/E ratio: 32x, below its 52-week average of 38x
- 12 million additional shares acquired by institutional investors in January 2026
- AMD stock rose 41% over the same period, outpacing Nvidia
Nvidia's stock has dipped 12% over the past three months, a notable underperformance compared to the 28% surge in the broader AI-focused Nasdaq CTA Index during the same period. This gap has emerged despite Nvidia maintaining its leadership in GPU sales, with data from the fourth quarter showing a 37% year-over-year increase in revenue from AI-related chip shipments. The company reported $26.9 billion in revenue for the quarter, up from $19.6 billion in the same period last year, yet its share price has not reflected this momentum. Analysts point to a combination of elevated investor expectations and short-term market rotation as key drivers behind the stock's relative weakness. While Nvidia continues to capture over 80% of the high-performance AI chip market, the recent rally in alternative AI infrastructure stocks—such as AMD and Broadcom—has drawn capital away from its shares. Notably, AMD's stock rose 41% over the same three-month window, outpacing Nvidia's gains and contributing to a broader market revaluation. The current valuation metrics suggest potential upside: Nvidia's forward price-to-earnings ratio stands at 32x, below its 52-week average of 38x, and its price-to-sales ratio is 25x, well under the sector median of 31x. These levels imply that the market may be discounting future growth too aggressively. Investors with a long-term horizon are now viewing the pullback as a strategic opportunity. Institutional activity has shifted, with over 12 million additional shares acquired by large funds in January alone, signaling confidence in Nvidia's fundamentals despite recent price action.