Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), and Microsoft (NASDAQ: MSFT) are each trailing the S&P 500 so far in 2026, with valuations falling to at least five-year lows in recent months.
Despite the underperformance, all three companies continue to deliver record-breaking financial results, creating a striking disconnect between sentiment and fundamentals.
Nvidia’s price-to-earnings ratio has dropped to 31, near its lowest level since 2019, even as the company posts accelerating revenue and earnings growth each quarter.
For its fiscal 2027 first quarter ended April 26, Nvidia generated record revenue of $81.6 billion, up 85% year over year and 20% quarter over quarter, driven by record data center revenue of $75 billion, which rose 92%.
Adjusted earnings per share soared 140% to $1.87 for the quarter, and management is forecasting year-over-year revenue growth of 95% to $91 billion for the second quarter.
Amazon’s P/E ratio fell to 25 earlier this year before rebounding slightly to 29, a valuation level not seen since 2008, yet the company continues to deliver strong results across its business segments.
In the first quarter, Amazon posted revenue of $182 billion, up 17% year over year, while EPS of $2.78 jumped 75%, with AWS cloud revenue accelerating to 28% growth.
Microsoft’s P/E ratio had fallen as low as 21 late last month before recovering slightly to 23, a level not seen since mid-2017, despite the company reporting robust results in its most recent quarter.
In its fiscal 2026 third quarter ended March 31, Microsoft reported revenue of $83 billion, up 18% year over year, diluted EPS of $4.27 growing 23%, and Azure Cloud revenue surging 40%.
All three companies face a common concern among investors: the worry that AI adoption will slow and that the current wave of data center spending and cloud growth cannot be sustained indefinitely.
Nvidia leads in the graphics processing units used to run AI models in data centers, while Amazon offers AI tools and models through AWS and Microsoft has deeply integrated AI across its products through its partnership with OpenAI.
History shows that in every prior instance when these stocks had their P/E ratios compressed to this degree, a robust rebound in their multiples followed once the companies demonstrated the resilience of their financial results.
Sentiment has a limited shelf life, and investors ultimately rely on sales and profit growth as the primary gauges of a stock’s long-term trajectory rather than short-term fears.
With Nvidia, Amazon, and Microsoft trading at 31 times, 29 times, and 23 times earnings respectively, each sits well below its historical average, presenting what some analysts view as a discounted entry point ahead of a potential re-rating.
