NVIDIA Stock Trades at 13x Forward Earnings
The Kobeissi Letter argues NVIDIA is cheap after a tech sell-off, while critics say its earnings are inflated by the AI buildout.
Updated on Nov. 6, 2026 in Public Companies
NVIDIA stock fell close to 10% in an overnight tech stock crash, prompting The Kobeissi Letter to call it cheap at a forward price-to-earnings ratio of approximately 13. Users countered that the company's earnings are artificially inflated by the AI buildout.
Why it matters
The valuation debate centers on whether NVIDIA's profit growth, which rose from $9.75 billion to $120 billion, reflects durable demand or a temporary spending boom. The question matters for investors weighing NVIDIA against the broader market.
NVIDIA trades at a forward P/E of approximately 13, compared with about 20 for the S&P 500 and 43 for Walmart. Roughly 70% of its revenue comes from five companies, a concentration the valuation debate has not resolved.
The players
NVIDIA
NVIDIA is a leading designer of graphics processors and AI computing hardware whose profits have surged alongside demand for AI infrastructure.
The Kobeissi Letter
The Kobeissi Letter is a financial commentary publication known for market analysis shared widely on social media platforms such as X.
The details
The Kobeissi Letter posted its valuation claim on X after an overnight tech stock crash that pushed NVIDIA down close to 10%. A forward P/E is calculated as market capitalization or stock price divided by earnings, and the post's cheapness argument rests on that math.
Timeline
Recent years: massive AI buildout drove NVIDIA's profit growth.
Overnight before publication: tech stocks crashed and NVIDIA fell nearly 10%.
November 6, 2026: article published on the Kobeissi valuation claim.
Market Dynamics
The valuation debate tests whether NVIDIA's earnings gains from the AI infrastructure capital expenditure cycle are durable. If that spending slows, the forward P/E that looks cheap today could expand as earnings fall.
For investors, a forward P/E near 13 versus 20 for the S&P 500 frames whether NVIDIA belongs in a portfolio. The earnings debate affects how much weight to give that discount.
The takeaway
Compare a stock's forward P/E against both the market and its own earnings durability before treating a low multiple as a bargain. A cheap-looking ratio on inflated profits can still mislead.
Further reading
Explore more on Public Companies coverage for context on valuation and earnings debates.
Source note: This article includes information reported by NDTV Profit.
