AI Chips Hit Cheapest Valuations Since 2011 as Nvidia Earnings Near

The Philadelphia Semiconductor Index (SOX) rebounded nearly 11% in two trading sessions, closing Monday at 10,033.93. Nvidia closed at $178.67 that same day, 26% below its 52-week high and stuck in bear territory. The broader market trend, however, remains negative.

The bounce follows a brutal stretch. On Nov. 5 alone, the SOX lost 12.2% during Wall Street's crash — its worst session since March 2020 — as fears of slowing AI infrastructure spending drove the decline. According to Bank of America, AI chip stocks now trade at a 22% discount to the S&P 500 based on expected earnings, with the SOX near 10 times two-year forward earnings, the cheapest since 2011.

That cheapness comes with a catch. Bank of America notes that if major tech companies cut their planned AI investments for 2027 by just 20%, chipmakers' expected profits could fall sharply — making today's discounts look far smaller than they appear.

Leadership risk adds pressure. CEO Jensen Huang admitted an affair with a former executive of Megaspeed, a Singapore-based Nvidia chip buyer, according to BeInCrypto. US authorities reportedly concluded she was a Chinese intelligence asset, which Beijing denies; Nvidia's board opened an independent investigation on Nov. 8 while backing Huang.

A Nov. 11 congressional deadline arrives days before Nvidia reports earnings on Nov. 17. Strong results could restore confidence in AI chip stocks, while disappointing forecasts could trigger another selloff. Bank of America still expects the sector to fall roughly another 10% before reaching a bottom in early 2027, suggesting the current rebound may be premature.