Nvidia Is “Undervalued,” Says Jim Cramer—Should You Be Nervous?

When Jim Cramer calls a stock undervalued, some traders instinctively brace for impact. His latest proclamation? Nvidia, at a forward price-to-earnings ratio of 24, is still a bargain. “It’s truly unassailable,” he insisted, doubling down on what may be the most crowded trade in modern equity history.

The chipmaker is already up over 170% this year. It briefly overtook Microsoft as the world’s most valuable company. It’s printing margins few tech giants can dream of. And yet, Cramer thinks it’s cheap.

Whether that’s reassuring or a red flag depends on how you interpret the man’s legacy. While his loud bullish calls on Nvidia have coincided with its meteoric rise, the broader market tends to treat his endorsements with a healthy dose of skepticism—especially when they arrive after a parabolic rally.

A Bull Market Darling Near Its Limit?

Nvidia’s fundamentals are hard to argue with. It dominates the AI chip market, commands enormous pricing power, and has become the de facto hardware backbone of generative AI. Even at sky-high levels, its PEG ratio sits near 0.6—suggesting the growth outlook more than justifies the valuation, at least on paper.

But “undervalued” is relative. That 24× multiple only looks modest if growth remains exponential. The moment AI infrastructure investment plateaus, or competitors like AMD or Intel manage to erode Nvidia’s moat, the premium could evaporate quickly. And in a market this saturated with optimism, expectations don’t just need to be met—they need to be crushed.

Cramer may be right on Nvidia’s long-term trajectory. But timing matters, and he has a history of showing up right before sentiment turns. Traders remember his 2008 calls on Bear Stearns. More recently, he cheered Coinbase just before its slide and dismissed Meta ahead of its rebound. It’s not about one bad call—it’s the pattern.

Crowded Trade Meets Loud Endorsement

Nvidia is no longer just a tech stock; it’s a sentiment thermometer. It reflects investor appetite for risk, AI optimism, and the belief that innovation can outrun valuation gravity. When Cramer stamps his approval on a name already priced for perfection, some see it as a final squeeze before rotation.

That doesn’t mean a crash is imminent. But in today’s market, where retail flow is hypersensitive and institutional money is quietly de-risking, Cramer’s timing might once again be the canary in the coal mine.

Tips for Traders

• Trim long positions: If you're sitting on gains, consider scaling back or deploying protective puts—especially as Nvidia hovers near technical extremes.

• Fade the hype tactically: Shorting a Cramer-endorsed stock at record highs isn’t a strategy—it’s a trade. Time it around earnings, Fed updates, or macro shifts.

• Use ETFs for balance: Semiconductor funds like SMH or SOXX offer exposure with insulation from single-name volatility.

• Watch the VIX: Nvidia often leads tech-driven market swings. A pullback here can ripple across the broader risk complex.

• Monitor hyperscaler capex: Spending cuts or AI investment slowdowns from Amazon, Microsoft, or Google could reset Nvidia expectations fast.

• Track AI chip competition: If AMD or Apple announce breakthroughs, sentiment could shift sharply away from Nvidia as the default AI bet.