Nvidia's Market Cap Drops $1 Trillion: Time to Buy or Sell?

According to Yahoo Finance, is Nvidia's (NVDA-US) stock now cheap enough to ignore? That's the hot debate currently unfolding in the markets.

Jessica Inskip, strategist at StockBrokers.com, said, "From a technical standpoint, the current setup is really favorable. This is a great buying opportunity. I believe Nvidia remains a key beneficiary of AI infrastructure buildout and is establishing a strong competitive moat, with significant growth potential ahead. That's why I'd choose to buy."

Nvidia has erased approximately $1 trillion in market value in less than two months. Its current forward P/E ratio stands at around 18x, below the S&P 500's estimated 21x.

This is Nvidia's cheapest valuation level since early 2019, before the AI boom took off—when the market still viewed Nvidia primarily as a gaming chip and Bitcoin mining stock.

Since hitting a record high on May 14, Nvidia's stock has declined about 16%, as investor capital shifts toward memory chip stocks like SanDisk (SNDK-US) and Micron (MU-US).

Bank of America analyst Vivek Arya noted that the sell-off in Nvidia has been driven by several factors:

- Rising memory costs squeezing margins - Increasing competition from custom ASIC chips - Overconcentration of investor holdings - The company allocating capital to supplier financing rather than aggressive share buybacks or dividend hikes

Nonetheless, Arya maintains a buy rating on Nvidia. He stated, "Our analysis suggests that at current valuations, the market appears to have already priced in a potential 30% to 35% hit to EPS by 2027 and 2028. But we don't believe such a discount is fully justified. We strongly disagree with the market's EPS discounting and instead see this as a more attractive entry point. Nvidia has a unique and durable growth model, and its current forward P/E of 18x is the lowest in seven years."

Other Wall Street analysts remain broadly bullish on Nvidia. According to Yahoo Finance data, about 95% of brokerage analysts rate Nvidia as either 'Buy' or 'Strong Buy,' with no firm downgrading its rating so far this year.

Nvidia's stock closed up 3.65% on Wednesday, reaching $204.12 per share.