Nvidia's Cheapest Valuation in Years Meets a Wall of Bullish Bets

More than 1.5 million Nvidia call options changed hands in one session, against fewer than 690,000 puts. That surge in bullish positioning arrived while the shares were still roughly 17% below their May record and the wider chip sector was selling off. The contrast captures Nvidia's current market puzzle: extraordinary business growth, a much lower valuation, and investors still arguing over whether the next big move is up or down.

The Bottom Line

• Nvidia traded just under $200 in one recent snapshot, about 17% below its May record, even as it resisted a broader semiconductor sell-off.
• Options traders placed a heavy bullish bet: calls exceeded puts by more than two to one, according to ThinkorSwim data cited by CNBC.
• Barchart said Nvidia's forward earnings multiple had fallen to its lowest level since before the AI boom, with one measure near 18 times and a later reading closer to 23 times.
• The business itself is still expanding rapidly: fiscal first-quarter revenue reached $81.6 billion, up 85% year on year.
• The pressure comes from China restrictions, custom chips, stronger competition and a shift in investor attention towards memory suppliers.

Breaking It Down

The share-price story changed quickly across the reports. CNBC's market snapshot put Nvidia just below $200, up only 4% for the year and 17% beneath its May high. A later Motley Fool snapshot showed a current price of $207.28 and an 8.7% year-to-date gain, still trailing the S&P 500's 10.2% rise.

Traders have nevertheless been leaning hard towards a rebound. CNBC reported more than 1.5 million calls against fewer than 690,000 puts, while one cluster of trades spent $3.5 million on $200 calls expiring at the end of July. A technical note from FXCM's UK market team also described a break above the $199-$200 area, with resistance around $204-$206 and higher targets near $211 and $218-$220.

The valuation debate is just as striking. Barchart said Nvidia's forward price-to-earnings ratio had fallen to its cheapest level since before the AI rally, at one point around 18 times projected earnings and more than 50% below its five-year average. Nvidia reported $81.6 billion in quarterly revenue, $58.3 billion in net income and $48.6 billion in free cash flow, while guiding towards roughly $91 billion in second-quarter revenue despite assuming no China data-centre sales.

Management has also pushed back against fears of product delays. Reports from TMGM and BigGo said the Rubin Ultra roadmap remained intact, while some rack designs were being adjusted rather than postponed. BigGo reported that Nvidia told Morgan Stanley investors quarterly revenue was approaching $100 billion, with demand spreading beyond large cloud groups.

Why This Matters

Nvidia's problem is no longer a simple shortage of demand. The company helped create a huge market for AI computing, but that success encouraged Google, Amazon, Microsoft and others to develop custom processors. At the same time, TechCrunch reported that the rental price for an hour on an Nvidia H100 GPU had fallen from a May peak of about $3.20, while DRAM memory prices kept climbing.

China adds another fault line. A survey cited by Barchart said Chinese technology companies expected to direct about 46% of AI-chip spending to domestic suppliers over the next year, up from roughly 30%. Nvidia still held an estimated 85% of the global AI GPU market in that report, but export restrictions and local competition could limit one of its biggest overseas opportunities. For GB readers following US technology shares, strong revenue can coexist with a weaker share price when expectations are already extreme.

The bullish case rests on scale, cash generation and a broader product range spanning GPUs, CPUs, networking and complete AI systems. The bearish case is that cheaper compute, custom silicon and memory bottlenecks could redirect profits elsewhere.

What Comes Next

The immediate market test is whether Nvidia can hold the $199-$200 area and break decisively above $204-$206, the levels identified by FXCM. Options activity also points to the end of July, when the heavily traded $200 calls expire.

Operationally, investors will watch the company's roughly $91 billion second-quarter revenue guide, the Rubin Ultra timetable and any confirmed change in access to China's advanced-chip market. Nvidia has also said it intends to return 50% of annual free cash flow to shareholders.