NVIDIA shares have now closed lower for seven consecutive trading sessions, marking the company's longest losing streak since 2022.

On Monday, NVIDIA shares finished the session down 2.91%, bringing the year-to-date gain to roughly 7% — the weakest performance among all Philadelphia Semiconductor Index components. This reflects a shift in AI chip spending that is increasingly being distributed across a broader range of semiconductor companies.

The valuation has moved lower in tandem with the share price, with NVIDIA's forward price-to-earnings ratio now sitting at approximately 18 times — a multi-year low. Despite the company's fundamentals remaining robust, the market has adopted a more cautious stance on pricing AI hardware.

In stark contrast to the share price weakness, Wall Street analysts have continued to raise their earnings estimates for NVIDIA, with profit expectations climbing a cumulative 13% over the past three months. This divergence between the stock's performance and fundamental expectations stands out as the most significant signal in the current pullback.

Valuation Decline and the Debate Over Earnings Quality

NVIDIA's forward price-to-earnings ratio has dropped to roughly 18 times, a recent low. The cautious market pricing of AI hardware is underpinned by investors' ongoing scrutiny of the company's earnings quality and customer concentration.

According to NVIDIA's most recent 10-Q filing, approximately $13.4 billion of the company's $58 billion in net income came from unrealized gains on publicly traded equity holdings. Excluding this component, the price-to-earnings ratio based on normalized net income rises to nearly 60 times. Additionally, the top three customers collectively account for 54% of total revenue.

Despite the pressure on the share price, Wall Street analysts continue to raise their profit forecasts for NVIDIA.

Over the past three months, profit estimates for NVIDIA have been revised upward by a cumulative 13%, with projections now pointing to $228 billion in profit for fiscal year 2027. Among the 82 analysts covering the stock, only three have issued hold ratings and just one has a sell rating. The average price target implies more than 50% upside from current levels.

The fundamental picture remains equally strong. NVIDIA's data center segment generated $193.7 billion in revenue for fiscal year 2026, with upstream computing infrastructure first capturing the scarcity premium.

On the capital returns front, NVIDIA authorized an additional $80 billion in share buybacks in the quarter ending April, surpassing Apple to become the largest single buyback program in the U.S. equity market.

Going forward, the key question is whether NVIDIA can stabilize after this consecutive decline, and whether the persistently rising analyst profit forecasts will ultimately be reflected in the share price.