Nvidia Corp (NASDAQ:NVDA) traded 13% below its five-year average as of April 9 while nine other artificial intelligence-related stocks were trading above their five-year average.
The AI average of all 10 stocks is trading at a 52% premium, according to an analyst note from JPMorgan's Samik Chatterjee, citing data from Bloomberg.
See below.
Table source: JPMorgan analyst note
As can be seen in the table above:
Super Micro Computer (NASDAQ:SMCI) leads the pack with its stock price trading at a 169% premium to its long-term average.
Dell Technologies (NYSE:DELL) follows next at 151% premium
Lumentum Holdings (NASDAQ:LITE) follow at 142%
Marvell Technologies (NASDAQ:MRVL) at 82%.
Also Read: Which Is The Most Undervalued AI5 Stock Right Now?
AI Stock Positioning Earnings
Despite the sector's growth prospects, AI stocks, on average, are trading at a 52% premium to their long-term valuation multiples.
For context, the S&P 500 Index, considered a barometer of the U.S. stock market, is currently 11% above its long-term average.
By that measure, Nvidia, trading at 13% below its 5-year average forward P/E multiple – appears to be great pick. Advanced Micro Devices (NASDAQ:AMD) and Arista Networks (NYSE:ANET) at 27% and 31% premium, respectively, may also be offering better value than other AI stocks (ex-Nvidia).
The premium on AI stocks' multiples right now, is definitely a dampener on enthusiasm for favorable positioning into earnings.
As investors brace for first-quarter earnings, navigating macro headwinds and sector-specific dynamics is crucial. JPMorgan's insights shed light on potential opportunities and challenges in the AI sector, guiding investors in optimizing their portfolios amidst evolving market conditions.
