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

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