Nvidia Forward P/E Falls to 18x, 11% Discount to S&P 500 as Wall Street Eyes $515 Target

Nvidia's forward price-to-earnings ratio has dropped to about 18 times, below the roughly 19 times carried by the SPDR S&P 500 ETF Trust (SPY) and an 11% discount to the index's average constituent — the widest gap since April 2015 — even as the chipmaker's market value tops $5 trillion. Analysts surveyed by Benzinga project earnings per share of $12.03 over the next 12 months, up sharply from about $0.40 at the end of 2022, when the stock traded above 40 times forward earnings following ChatGPT's launch. With shares near $215, the multiple has fallen by more than half. Two risks weigh on the stock: whether AI capital spending by Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Meta (META), Oracle (ORCL) and SpaceX can keep expanding — projected at $930 billion this year and $1.35 trillion next year before flattening — and financing pressure at neoclouds such as CoreWeave (CRWV) and Nebius (YNDX), which borrow to buy Nvidia chips. Yields demanded on CoreWeave debt have exceeded 16%; its shares fell 42% over the past month. Despite that, all 29 tracked analysts rate Nvidia a buy, with an average target of $343 and a high of $515 from Raymond James.