So Nvidia just had its worst month on the Dow since… well, since it became the poster child for “AI will save us all.” Down 15% in November, which for a stock that’s been basically printing money for three years straight, feels like watching your overachieving friend finally get a B+ on a test.
Let’s be real here: NVDA has been on an absolute tear. We’re talking 119% average annual returns over three years. That’s not investing, that’s basically legal gambling with better odds. This year alone, it’s “only” up 33% – and yes, I’m using air quotes because most of us would kill for those returns on our boring index funds.
But November? November was different. The AI hype machine hit a speed bump, and suddenly everyone remembered that trees don’t actually grow to the sky (shocking, I know).
What Actually Happened?
Here’s the plot twist: Nvidia’s earnings were actually fantastic. Record revenue, record profits, partnerships with OpenAI, Anthropic, Oracle – basically everyone who matters in the AI space. So why the selloff?
Two words: reality check.
The stock was trading at 57 times earnings. For context, that’s like paying $57 for a sandwich because you heard it might cure hunger forever. Sure, it’s a really good sandwich, but come on.
Then Google decided to crash the party by announcing they’re making their own AI chips. Because apparently, everyone wants to be the cool kid making semiconductors now. Meta’s interested too, which has investors wondering if Nvidia’s monopoly on being the AI chip dealer might have some competition.
The Numbers Game
Here’s where it gets interesting (and by interesting, I mean “actually reasonable for once”). After the November tumble, NVDA’s trading at 43 times earnings – still high, but not “mortgage your house” high.
More importantly, its forward P/E is sitting at 23, which is actually pretty reasonable for a company that’s basically the arms dealer in the AI gold rush. And that five-year PEG ratio under 1? That’s finance speak for “maybe this isn’t completely insane after all.”
So… Time to Buy?
Analysts still think NVDA can hit $225 per share, which would be a nice 26% bump from current levels. Not the triple-digit madness we’ve seen, but hey, 26% beats your savings account by a country mile.
The truth is, nobody knows if we’re in an AI bubble or just getting started. But Nvidia is still the company everyone needs to talk to if they want to build anything AI-related. It’s like being the only plumber in a town where everyone’s pipes just burst.
At these slightly more earthbound valuations, NVDA might actually be a reasonable bet instead of a pure FOMO play. Just remember: past performance doesn’t guarantee future results, but it sure makes for great cocktail party stories.