# Nvidia wipes out $1 trillion but hits pre-AI valuation lows — contrarian bounce play

_AI-generated trading idea · LONG · NVDA, SMH_

> Canonical page: https://commonquant.ai/research/for-you/nvidia-wipes-out-1-trillion-but-hits-pre-ai-valuation-lows-c--5d4e0028-38fb-439b-bfd0-efa30c75c3fc

Nvidia stock has crashed so hard that it's now cheaper relative to its earnings than it was before the AI frenzy began — cheaper than a candy company. Yet traders are already piling in to bet on a rebound, betting that the selling has gone too far. With expectations now extremely low heading into earnings, even a modest beat could spark a rally.

## Idea

Nvidia has lost roughly $1 trillion in value, pushing its price-to-earnings ratio back to pre-AI-boom levels and making it literally cheaper than Hershey — an extraordinary reset for a company still dominating AI chip sales. Separately, we see options traders aggressively betting on a rebound even as the broader chip sector sells off, and Goldman Sachs is warning that earnings expectations have fallen so low that future results alone won't drive a rally. This combination — rock-bottom valuation, contrarian buying pressure, and reset expectations — creates a classic contrarian setup where even a small positive catalyst could trigger a sharp snap-back.

## Key details

- Symbols: NVDA, SMH
- Timeframes: D1
- Tags: \#tech, \#semiconductors, \#contrarian, \#valuation

## Community

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## News sources

- [Wave of Earnings Surprises Will Be Hard to Repeat, Says Goldman](https://www.bloomberg.com/news/articles/2026-07-08/wave-of-earnings-surprises-will-be-hard-to-repeat-says-goldman) — Bloomberg
- [Nvidia Is World's Most Valuable Company and Cheaper Than Hershey](https://www.bloomberg.com/news/newsletters/2026-07-08/nvidia-is-world-s-most-valuable-company-and-cheaper-than-hershey) — Bloomberg
- [As chip sector takes it on the chin, traders bet on a big Nvidia rally](https://www.cnbc.com/2026/07/07/as-chip-sector-takes-it-on-the-chin-traders-bet-on-a-big-nvidia-rally-.html) — CNBC
- [Nvidia's $1 Trillion Slide Sends Valuation to Pre-AI Boom Levels](https://www.bloomberg.com/news/articles/2026-07-08/nvidia-s-1-trillion-slide-sends-valuation-to-pre-ai-boom-levels) — Bloomberg

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