Is Nvidia a Buy on the Post-Earnings Dip? This Number Screams "Yes"

By Jeremy Bowman – Feb 28, 2026 at 6:45PM ESTKey PointsNvidia delivered another strong earnings report last Wednesday.After the stock initially gained on the numbers, shares fell nearly 10% over the next two days, though it wasn't clear why.Nvidia trades at a forward P/E of just 21.5, even though it's expected to grow by more than 70% this year.Nvidia (NVDA 4.43%) delivered a smashing earnings report on Wednesday night, but something surprising happened afterwards. The stock sold off sharply over the next two days, losing nearly 10% through Thursday and Friday, even though the AI chip leader easily beat estimates on the top and bottom lines, and offered strong guidance for the first quarter. There wasn't a clear reason for the sell-off. In fact, Nvidia stock was up after the numbers came out, and Wall Street analysts roundly raised their estimates on the report. The stock may have fallen over the perception that it was too expensive, and investors seemed to rotate into beaten-down software stocks on Thursday. Additionally, a blowout report from Nvidia isn't really newsworthy at this point, and there are questions about the sustainability of the AI spending spree, especially as the big hyperscalers (Microsoft, Amazon, Alphabet, and Meta Platforms) are poised to spend more than $600 billion on capital expenditures, much of it on AI infrastructure, which is taking a big bite out of their free cash flow. Despite the nervousness around the AI boom, there is one number that shows how cheap Nvidia has gotten, making it look like a screaming buy. Image source: Nvidia. Nvidia is now cheaper than the S&P 500 Based on forward estimates, Nvidia is now cheaper than the S&P 500 (^GSPC 0.43%). The average of 48 Wall Street analysts covering the stock calls for Nvidia to generate $8.23 in earnings per share this year (fiscal 2027). Based on the stock's closing price of $177.19 on Friday, Nvidia trades at a forward P/E of 21.5. Forward estimates for the S&P 500 vary, but most place it around 22. According to Yardeni Research, it was 21.8 on Feb. 27. Nvidia is growing much faster than the S&P 500 and that is expected to continue this year. The company is coming off of 73% revenue growth in the fourth quarter, and analysts hiked their earnings estimates following the report. Wall Street expects Nvidia's revenue to jump 69% to $364.8 billion this year, and for earnings per share to increase 73% to $8.23. S&P 500 earnings per share, on the other hand, are expected to grow by just 17%. ExpandNASDAQ: NVDANvidiaToday's Change(-4.43%) $-8.20Current Price$176.69Key Data PointsMarket Cap$4.3TDay's Range$176.56 - $182.5852wk Range$86.62 - $212.19Volume11MAvg Vol174MGross Margin71.07%Dividend Yield0.02% Chip stocks are still trading at a discount Investors tend to reward safety with higher premiums, which is why sectors like consumer staples and healthcare tend to be more expensive than financials or industrials, even though they aren't necessarily growing faster. The same is true with software and semiconductors. Software has historically been regarded as a reliable income stream due to its subscription model. Hardware like chips, on the other hand, has been highly cyclical, and Nvidia has experienced booms and busts in the past, around crypto, for example. However, selling off a stock like Nvidia by 10% after the earnings report we just saw shows that investors are still underweighting the strength of the semiconductor sector and the AI boom. If a stock is growing four times faster than the S&P 500, but trading at a similar valuation, that looks like a mispricing. Nvidia is being priced as if it will return to the market's much slower rate of growth after this year is over, which is unlikely to happen, especially with the new Vera Rubin platform expected to come out later this year. Finally, Nvidia has a history of beating analyst estimates. For example, Wall Street had expected Nvidia's revenue growth to gradually decelerate last year. Instead, it inflected in the third quarter and continued to accelerate in the fourth quarter. At a forward P/E of 21 and with expected growth of more than 70% this year, Nvidia looks like a no-brainer buy. Investors should take advantage of the market's mispricing. 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Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.TMFHoboX@TMFBowmanStocks MentionedNvidiaNASDAQ: NVDA$176.69(-4.43%)-$8.20S&P 500 IndexSNPINDEX: ^GSPC$6,878.88(-0.43%)-$29.98Meta PlatformsNASDAQ: META$648.51(-1.29%)-$8.50MicrosoftNASDAQ: MSFT$393.00(-2.17%)-$8.72AlphabetNASDAQ: GOOGL$312.00(+1.50%)+$4.62AmazonNASDAQ: AMZN$210.08(+1.04%)+$2.16AlphabetNASDAQ: GOOG$311.73(+1.49%)+$4.58*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.