TradingKey – Amid a concentrated selloff in AI stocks, Nvidia (NVDA)’s valuation has fallen to levels not seen in years. According to FactSet data, the company’s next-12-month forward price-to-earnings ratio is currently about 11.7 times, marking its lowest level since October 2011 and falling below 12 times for the first time since 2012. In comparison, the S&P 500 Index’s forward P/E ratio remains near 18 times.

On the surface, this means investors now only need to pay less than $12 for every $1 of Nvidia’s expected earnings, which appears clearly attractive compared with past valuation levels. However, a declining valuation does not necessarily mean the stock is cheap. Even as the stock price falls, Wall Street still maintains high…