Billionaire and Third Point founder Dan Loeb says investors are making a historic mistake on one dominant semiconductor name just because of its astronomical market cap.
The News
In a new interview with the All-In Podcast crew, Loeb pushes back on the popular narrative that Nvidia (NVDA) is overvalued because of its $5 trillion market cap.
The billionaire says Jensen Huang’s chipmaker is actually undervalued on a forward earnings basis.
“I mean, that’s a rub against Nvidia, which is a $5 trillion company. And people feel like it’s sort of a ceiling on it. I think we’ll look back at some point in time and say that was a foolish way to think about Nvidia given its dominant position and its valuation relative to everyone else.
Yeah, absolutely [it is undervalued], on earnings over the next two or three years.”
According to Loeb, hedge funds are structurally required to short assets via long-short pods, and Nvidia is a “safe” target. But he notes that he has seen a similar situation in the past when hedge funds shorted Alphabet (GOOGL/GOOG) and Amazon (AMZN), but the stocks eventually broke out and printed all-time highs.
“First of all, technically, there’s all this other stuff that’s growing faster and going up more. Long-short pods are structured such that they have to be short something, so Nvidia feels like a safe short. By the way, Google was a safe short. Amazon was a safe short. So, I mean, this just happens… then they break out. I think that’ll eventually happen with Nvidia.”
What It Means for Investors
Loeb appears to be saying that even though Nvidia is the world’s most valuable company, it is still a solid asset to accumulate given its fundamentals. Data shows that its price-to-earnings (P/E) ratio of 31.27 is 38% below its 10-year average of 53.72. In April, its earnings per share (EPS) came in at $2.40, representing a 211.7% increase year-over-year.
Nvidia also trades at 31.27 times earnings, but its 66% one-year EPS growth and 201.4% three-year EPS growth suggest valuations are supported by strong earnings growth. Comparing Nvidia to its peers, NVDA is in a much stronger fundamental position.
Looking at the chart, NVDA appears to be repeating the same pattern witnessed between May 2024 and June 2025, when the stock traded within a defined range with upside and downside deviations. The rally to an all-time high of $236 appears to be a deviation for now, as NVDA trades below the high end of its current range at $210.
It remains to be seen whether it will also print a downside deviation below the range low of $164.
All in all, the technicals and fundamentals suggest that a scenario exists where both Loeb and bearish hedge funds could be right, but it’s a matter of timing. In the short term, Nvidia could witness selling pressure and reward bearish hedge funds, but in the long term, Loeb’s bullish stance based on fundamentals could also be correct.
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