Nvidia's Sales Doubled, but Its Valuation Fell — Why Investors Doubt What's Next
Nvidia's sinking valuation is flashing a warning about whether booming profit growth can last, Bloomberg reported on September 22, 2026. That warning matters for savers because Nvidia sits in many pensions and index funds.
The report came weeks after Nvidia said revenue for the second quarter ended July 26, 2026 was $96.2 billion, up 106% from a year ago, according to Nvidia. Data Center revenue was $89.0 billion, up 117% from a year ago. Nvidia describes itself as the pioneer of GPU-accelerated computing, with products and platforms for gaming, professional visualization, data center, and automotive markets.
Expected-earnings multiples compressed even as sales kept growing. The forward P/E ratio, which is stock price divided by forecast earnings for the next 12 months, fell. Nvidia lost roughly $1 trillion in market value in less than two months before July 8, 2026, and the stock was the cheapest it had been since before the AI boom, according to Bloomberg. That July reset took forward P/E back toward June 2019 levels, when Nvidia traded at 22.47 times forward earnings, according to Yahoo Finance.
The fall did not start in July. Nvidia's P/E sank to a seven-year low as of March 30, 2026, according to Reuters. MarketWatch's quote page for NVDA refers to a historic $150 billion buyback announcement by Nvidia. A separate MarketWatch report, undated and therefore given less weight than the 2026 reports, had put the stock at 35.99 times 12-month forward earnings and described it as relatively inexpensive after a large rally.
Some Wall Street analysts pushed back against that fall. In August 2026, BofA said Nvidia shares could be trading at a discount of as much as 50% tied to AI risks, according to Bloomberg. On August 24, 2026, MarketWatch published a piece titled It's time to bet big on Nvidia's stock, says this analyst who thinks the market has it all wrong. Earlier MarketWatch pieces from December 2025 made a similar case that the stock was unusually cheap and almost historically cheap, with history suggesting scope for gains ahead.
The broader context here is that the market is pricing weaker durability of earnings, not weaker current earnings. Think of a multiple as what you will pay today for each dollar of next year's profit. When that price falls through 106% revenue growth, investors are betting that future growth will slow, profit on each extra sale will shrink, or heavy AI equipment spending will eat into returns. That drop in what investors will pay is what Wall Street calls de-rating.
In my view, savers and investors should read the sequence, not any single headline, for what it says about risk and cash returns. A seven-year low in March, a pre-AI-boom multiple in July, a 50% risk-discount argument in August, and a September warning on profit sustainability all point the same way on doubts about AI spending cycles. The $150 billion authorization and the $89.0 billion Data Center quarter sit on opposite sides of that repricing. One supports earnings per share, or profit divided by shares outstanding, by shrinking the share count. The other has to be repeated to justify the old higher valuation. For anyone holding Nvidia in a fund, the question that counts is whether Data Center growth can persist and turn into free cash flow, or cash left after bills and investment, not whether the multiple looks low against past sales.
