Nvidia options traders bank on longer-term stock recovery

Nvidia's stock value plummeted by a third following the resignation of CEO Jensen Huang, who left the company on November 12. This dramatic drop has made Nvidia's shares appear like an historically great investment based on conventional metrics. The GPU company's stock peaked at $243 on October 5, giving it the world's largest market cap at $5.85 trillion.

Analysts were unanimous in their praise for Nvidia's value at that time, as the company was selling at a modest 30 times earnings, compared to its 100% earnings growth rate.

Since October, Nvidia's stock has plummeted 34% to $161, a significant drop that slashed nearly $2 trillion from its valuation. This makes its price-to-earnings ratio (PE) 20, a figure that suggests it is a remarkable value play. For comparison, Apple and Amazon have PE ratios of 40 and 22, respectively, and their growth rates are a fraction of Nvidia's speed.

Despite its impressive size and growth rate, Nvidia has not fallen victim to the law of large numbers. In the quarter ended October 31, Nvidia's sales jumped 26% from the previous three-month period, outperforming the growth rates of the two previous quarters. Moreover, Nvidia's gross margins reached a substantial 75% in the October quarter, surpassing its FY 2026 target of 71.3%.