For much of the artificial intelligence rally, Nvidia Corp. was synonymous with expensive valuations, but that is no longer the case. Despite becoming the world's most valuable company with a market capitalization approaching $4.7 trillion, Nvidia now trades at roughly 30 times trailing earnings. This valuation multiple is well below several of Wall Street’s most popular AI stocks, suggesting investors are no longer paying the biggest premium for AI’s dominant chipmaker. Instead, the market’s richest valuations are being reserved for companies expected to deliver the next wave of AI-driven growth.

Advanced Micro Devices Inc. trades at about 180 times earnings, Palantir Technologies Inc. commands a multiple of around 130, while Arm Holdings Plc carries a trailing price-to-earnings ratio exceeding 400. Nvidia’s valuation stands out not because it is cheap in absolute terms, but because of how it compares with these AI peers. The company’s trailing P/E is only modestly above Alphabet Inc.’s roughly 27 multiple and below Apple Inc.’s approximately 34. It also trades at less than half Broadcom Inc.’s earnings multiple of around 62.

Valuation comparison

The following table illustrates the trailing and forward price-to-earnings ratios for major technology companies involved in the AI sector.

Future earnings expectations

Premium valuations can be justified when earnings growth keeps pace. AMD is expected to grow earnings by roughly 78% next year, while Palantir’s earnings are projected to increase by about 43%. Arm is forecast to deliver nearly 39% EPS growth. Nvidia, meanwhile, is expected to grow earnings by more than 40% over the next year while continuing to post one of the strongest long-term growth records among large-cap technology companies.

Shift in AI investing

The changing valuation landscape reflects a broader shift across AI investing. During the early stages of the AI boom, investors were willing to pay almost any price for exposure to the theme. Today, valuations appear to matter more, with companies increasingly judged on their ability to convert AI demand into sustainable earnings growth. While Nvidia shares have gained only modestly this year after years of exceptional returns, investors have rotated across different parts of the AI ecosystem, rewarding companies tied to memory, semiconductor manufacturing equipment, and infrastructure.

Nine directors at Nvidia Corp. received annual equity awards valued at $237,041 each on June 25, according to filings with the U.S. Securities and Exchange Commission. The grants come as the AI chipmaker’s stock has risen 23.41% over the past year.

The Form 4 filings disclosed that Brooke Seawell, Harvey C. Jones, Tench Coxe, Melissa Lora, Dawn Hudson, Aarti Shah, Stephen Neal, Mark Stevens and John Dabiri each received 1,211 restricted stock units (RSUs). Based on Nvidia’s closing price of $195.74 on the grant date, the value of each award totaled approximately $237,041.

Vesting and Ownership Details

The RSUs are subject to a vesting schedule where 50% will vest on Nov. 18, 2026, and the remaining 50% on May 19, 2027. The filings state that the awards are granted for no consideration in connection with service on the Board of Directors. If a director dies while serving, the awards become fully vested immediately.

The filings also highlight significant existing holdings by several directors. Stevens reported owning more than 11.5 million shares directly, while Coxe disclosed holdings exceeding 30 million shares through trusts and a profit-sharing plan. Jones and Seawell also reported substantial trust-held positions. Lora disclosed a transfer of 1,799 shares to a family trust for estate planning purposes.

Analyst Expectations and Price Targets

Attention now turns to Nvidia’s estimated earnings report on Aug. 26. Wall Street projects earnings of $2.07 per share, up from $1.04 in the same quarter last year. Revenue is expected to climb to $91.70 billion from $46.74 billion year-over-year.

The average of the three most recent analyst updates from China Renaissance, Needham and DA Davidson implies an upside of approximately 51.85% from current levels. Nvidia shares closed Monday at $194.97, up 1.27%, and edged up 0.09% to $195.14 in after-hours trading.