Nvidia stock 'undervalued' compared to Big Tech peers: BofA

For our chart of the day, we're looking at big tech valuations and Yahoo Finance's Julie Hyman joins me now with a closer look. In particular, Josh, we are zeroing in on NVIDIA, and that's because Bank of America says the stock is still undervalued here. As we know, NVIDIA recently hit a new record, but over the past few days, it has been falling and fell. Today, in particular, along with the rest of big tech, but depending on how you value the stock, indeed, you can see it is still potentially not overvalued at the least and not undervalued at the most. So, in any case, Bank of America's Vivek Arya looked at the price to earnings to growth ratio, in other words, the peg ratio, which takes into account the future growth prospects for these various tech stocks. And he looked at the Magnificent Seven plus Broadcom, one of the bigger publicly traded chip companies out there, and looked at this peg ratio. Now, at the top here, you've got Apple. Apple trading at about 2.6 times, we'll see if we can get it to right today, 2.6 times, well, it can't, 2.6 times. If you're measuring it by the peg ratio, Tesla then follows that. And this is all based on the prices as of the close on October 18th. That's when this research came out. All the way down here is NVIDIA at about 0.9 times. If you look at it again for the peg ratio. So on this basis, Arya says it is not overvalued. It is still worth a look here. Arya also spoke on the Opening Bid podcast with our Brian Sazi and talked to him about why valuation is kind of tricky when you're trying to decide whether to buy a stock. You know, where we spend 90 percent of our time is interestingly right not on valuation per se. Because I think that, especially with technology stocks, valuation sometimes is a lagging indicator, right? So it's interesting that I mentioned that Chad GPT came out on November 30th, 22 and NVIDIA was actually trading at a higher multiple that day than it is trading today. So that tells you that, you know, when these stocks look the most expensive, what they're really signaling is that their opportunity is getting much bigger and their competitive position is improving. So sometimes it's actually better to buy or better to consider technology stocks that are trading at higher multiples than lower multiples, right? Because these stocks have a way of sniffing out the future, right, if you will. So in other words, stocks, as they go up, reflecting the prospects for future growth there. On the flip side, Josh, you know, you and I talked to Patrick Moorhead earlier, and while he's a big NVIDIA fan, he pointed out competition is coming here, among others, NVIDIA's clients want that competition. For sure. Julie, thank you.