NVIDIA Corp. is trading near its lowest valuation in more than a decade despite surging financial performance, as market skepticism grows over the longevity of the artificial intelligence (AI) boom.

The silicon giant is currently priced at under 17 times forward earnings, a steep drop from more than 25 times expected profits in May and half its valuation multiple from 2025, according to a Bloomberg analysis. The decline comes even as consensus estimates NVIDIA’s revenue and net income to jump roughly 90% and 99%, respectively, in its current fiscal year, targeting an estimated $410 billion in sales.

Market analysts attribute the valuation disconnect to structural risks, including margin compression and rising competition. NVIDIA’s gross margin, which reached a staggering 75% last quarter, is projected to dip below 72% by the fourth quarter due to escalating costs for critical components like memory chips.

Simultaneously, major tech clients are attempting to limit their reliance on the chipmaker. Hyper-scalers such as Meta Platforms Inc. and Alphabet Inc. are actively designing proprietary AI hardware.

“Companies want to reduce their reliance on NVIDIA, so it is very conceivable its market position will weaken over time,” said David Russell, global head of market strategy at TradeStation. “Multiples expand when companies are well positioned with potential to get better, and NVIDIA doesn’t offer that.”

While NVIDIA stock is up roughly 23% in 2026, second among the Magnificent Seven tech giants behind Apple Inc., it severely trails the broader chip sector. The Philadelphia Stock Exchange Semiconductor Index (SOX) has surged nearly 78% this year, buoyed by rivals like Advanced Micro Devices Inc. and Intel Corp., which have both more than tripled in value. NVIDIA currently sits near the bottom of the index’s leaderboard.

NVIDIA CEO Jensen Huang has actively pushed back against Wall Street’s cautious stance, describing his company as “incredibly misunderstood” and labeling it “the world’s first and only growth value stock” at a recent Goldman Sachs technology conference. NVIDIA recently projected a robust 70% revenue growth rate for fiscal 2028, easily outpacing initial analyst expectations of 45%.

Despite market anxiety surrounding massive data center capital expenditures and rising interest rates, some institutional investors view the discounted valuation as an attractive opportunity.

“The stock has de-rated pretty significantly, which suggests a healthy dose of skepticism that the company’s current earnings power is sustainable,” said Eli Horton, senior portfolio manager at TCW. However, Horton noted that without imminent regulatory crackdowns or immediate spending pullbacks from major tech firms, the low multiple presents a strong setup for buyers. “This seems like a very favorable multiple to have as an entry point.”