Why Nvidia Stock Still Trades at a Heavy Discount to Chip Rivals

Nvidia shares rose as investors renewed optimism around artificial intelligence, but the article argues the stock still trades at a discount to chip peers and the broader market. Nvidia is up 11% year to date and 16% over 12 months, yet it has badly underperformed the PHLX Semiconductor Index, which is up 61% this year. The company’s forward P/E of 18.9 is below the S&P 500’s roughly 20x and well under AMD’s 43x and Intel’s 50.4x. Analysts at Raymond James say the discount reflects momentum and scarcity trade dynamics rather than weak fundamentals. The key pressure point is that AI-chip spending is spreading across a wider range of semiconductor vendors, including AMD and Intel, increasing competition for Nvidia’s accelerator business. Raymond James remains bullish, pointing to Nvidia’s cash generation, market leadership, and plans to return 50% of free cash flow via dividends and buybacks.