Nvidia Trades at 11.77x Earnings: Cheapest Valuation Since 2011

By Nathan Brooks

Nvidia now trades at just 11.77 times expected earnings over the next 12 months — its lowest valuation on that measure since 2011, according to FactSet data. Investors are paying less than $12 for every $1 of anticipated profit. The S&P 500 as a whole, by comparison, trades around 18 times forward earnings. That means the market's most important AI name is now cheaper than the average large-cap stock.

After a brutal stretch, some of the biggest names in artificial intelligence are starting to look downright cheap, MarketWatch editor in chief Mark DeCambre writes. On paper, anyway.

Bargain or falling knife?

So what does this change for investors weighing Nvidia here? The question splits into two parts. First, is the stock genuinely cheap? Second, do investors still believe the earnings forecasts that make it look cheap?

The doubts are piling up. Nvidia shares were already falling before the scandal surrounding CEO Jensen Huang erupted, DeCambre notes. Now Huang's tenure at the helm has become another question mark.

The company has tapped Joon H. Kim, a former federal prosecutor who previously investigated former New York Governor Andrew Cuomo, to look into the allegations involving Huang. Nvidia could also soon face tougher export rules that would make it harder to sell chips to China following the scandal.

Rates are moving the wrong way

Tuesday's trading added another cause for caution. The 2-year Treasury yield — a closely watched gauge of where investors think Fed interest rates are headed — posted its biggest one-day jump since April 2025. The trigger was a hotter-than-expected October inflation report, which raised the prospect of bigger rate hikes.

One prominent economist is now warning that a zealous Fed could pose a big risk for stocks heading into 2027, DeCambre reports.

There's an uncomfortable twist here: the AI boom might itself be helping fuel the inflation that's making borrowing pricier for the sector.

An $800 billion debt problem

Federal Reserve Vice Chair for Supervision Michelle Bowman warned Tuesday of a bigger danger beyond valuations. AI-related debt is on track to exceed $800 billion this year, and the companies fueling the boom are increasingly entangled with one another through loans, investments and financial guarantees.

If the enormous bets on artificial intelligence don't pay off, the damage may not stay confined to the AI industry, Bowman's warning implies. It could reach consumers and businesses far beyond Silicon Valley.

CoreWeave's answer

CoreWeave has sat at the center of Wall Street's concerns about the AI industry's borrowing binge. Its shares are now surging after the company unveiled a new financing strategy that includes prepayments. The open question: has it found a sustainable way to ease one of investors' chief worries?

Rival chipmaker AMD didn't get a free pass from Nvidia's turmoil. AMD stock came under pressure Tuesday as investors weighed whether the upheaval will translate into lasting wins for the competitor.

Where markets stand now

Wall Street was open for Veterans Day, but the bond market got special dispensation to close after Tuesday's inflation-driven selloff. Bond investors' real test comes Thursday, though exchange-traded funds such as the iShares 20+ Year Treasury Bond ETF and the iShares Core U.S. Aggregate-Bond ETF offered some indication of fixed-income sentiment while traders were off.

Stocks, meanwhile, traded on a more upbeat note. Nasdaq-100 futures climbed sharply, suggesting beaten-down tech shares could be headed for a rebound.

The bottom line for practitioners

The setup is genuinely unusual: a sub-market multiple on the AI trade's flagship stock, a central banker flagging $800 billion in sector debt, and a rate path tilting hawkish all at once. For portfolio managers, the practical question isn't whether Nvidia is statistically cheap — at 11.77 times forward earnings, it clearly is by recent standards. It's whether the earnings denominator survives an export crackdown, a CEO investigation, and costlier AI-sector financing at the same time. Thursday's bond market return, and the next inflation print, will tell you a lot about how that denominator holds up.