Apprehensions increase regarding the valuation of Nvidia (NVDA)

The CEO of a global financial advisor says Nvidia (NASDAQ: NVDA) earnings – after the bell on Wednesday – are expected to be strong again, but investors are increasingly questioning whether the chip giant’s huge valuation can withstand the pressure from bond markets and rising yields.
Deavere Group.

Markets are once again heading into Nvidia’s latest results with optimism after a sustained rally driven by demand for AI and tech infrastructure.

Nigel Green says investors are right to expect another blockbuster number. But he warns that even the strongest earnings growth may struggle to fully offset growing valuation concerns in the current macro environment.

“We expect another strong earnings performance from Nvidia. Demand for AI and technology remains extraordinary and the company continues to dominate the most important growth theme in global markets.”

“However, valuations are becoming increasingly difficult to justify as the bond market continues to pressure expensive growth stocks.

“Higher yields change the equation for investors.

“Discounting rising rates makes future earnings less valuable, and this leads to increased scrutiny around companies trading at extremely high multiples.”

Nvidia has become the defining stock of the AI ​​and tech boom, with investors pouring capital into the company considered central to the next phase of computing infrastructure.

But, says Nigel Green, markets are now entering a more complex phase where exceptional operating performance alone can no longer guarantee an uninterrupted rally.

“Investors are no longer rewarding growth at any cost.

“There is increasing valuation sensitivity across the market, particularly among stocks that have already experienced extraordinary gains in a relatively short period of time.

“Nvidia continues to perform at elite levels, but expectations have now grown so high that even excellent results cannot offset broader valuation concerns.”

Treasury yields and bond market volatility are becoming increasingly influential in determining sentiment toward high-growth tech companies, says Deavere’s CEO.

“Bond markets matter a lot here,” says Nigel Green.

“As yields rise, investors have options for equities that did not exist at the same level during the ultra-low-rate era. This naturally puts pressure on highly valued sectors.

“AI and technology remains a transformative long-term story, but the market is becoming more disciplined in how it prices future growth.”

He says the company’s earnings will still underpin the structural strength of the AI ​​buildout currently underway across global economies.

“No serious investor doubts the scale of the AI ​​opportunity,” says Nigel Green.

“The issue now is one of valuation sensitivity, not the quality of Nvidia’s business.

“The market may simultaneously be confident in Nvidia’s long-term dominance, while also questioning whether current pricing already reflects years of future success.”

“Investors should expect strong data.

“But they should also expect markets to remain highly sensitive to valuation risks as bond yields continue to influence global asset pricing.”

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