Nvidia (NVDA) stock is hovering near their year-to-date high after the artificial intelligence (AI) darling reported blockbuster financials for its second quarter.
Yet, the Big Short investor Michael Burry says NVDA is “wildly undervalued” on paper at a forward price-earnings (P/E) multiple of about 24x.
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Following the post-earnings rally, Nvidia shares are up more than 20% versus the start of this year.
www.barchart.comWhy Does Burry Sees Nvidia Stock as Undervalued?
Burry’s bullish view of NVDA’s valuation is rooted in a striking mismatch between the titan’s earnings growth and the multiple investors are paying for it.
For a dominant supplier of artificial intelligence computing infrastructure that continues to grow at an “exceptional” pace, Nvidia’s current P/E ratio actually represents a significant discount to peers, he argued in his latest Substack post.
The company more than doubled its Q2 revenue on a year-over-year basis and guided for roughly $108 billion in revenue for the current quarter, handily beating Street estimates.
Note that Nvidia has a history of closing both September and October in the “green,” a seasonal pattern that makes it even more attractive to own in the near term.
Why Burry Still Recommends Caution on NVDA Shares
Despite acknowledging the apparent bargain, Burry remains cautious on Nvidia shares.
His own theoretical value for the company is “much lower” than its current market cap, reflecting concerns that the giant’s extraordinary margins and competitive advantage may not last indefinitely
Burry believes its AI chip monopoly could prove shorter-lived than investors expect, which would eventually pressure earnings.
He also questioned NVDA’s aggressive investments and financing arrangements, warning capital spending and efforts to expand the ecosystem could ultimately weigh on shareholder returns.
Note that Burry maintains massive short and put exposure against Nvidia, while buying December call options only as a hedge against an earnings-driven rally.
Wall Street Remains Bullish on Nvidia
Despite Burry’s caution, however, Wall Street remains bullish on NVDA stock for the rest of 2026.
The consensus rating on Nvidia sits at “Strong Buy” with the mean price target of about $307 indicating potential upside of more than 30% from here.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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