KUALA LUMPUR, March 30 (Bernama) -- Bursa Malaysia’s benchmark index closed lower today, in line with most regional markets, as investors adjusted their risk exposure amid spiralling oil prices driven by the ongoing West Asia conflict, now in its second month. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) retreated by 24.75 points or 1.44 per cent to 1,687.90 from Friday’s close of 1,712.65. The market bellwether opened 10.57 points weaker at 1,702.08 and fluctuated between 1,682.79 and 1,702.38. The broader market was bearish, with decliners thumping advancers 956 to 371. A total of 373 counters were unchanged, 1,042 untraded and 134 suspended. Turnover expanded to 3.98 billion units worth RM4.85 billion from last Friday’s 2.97 billion units worth RM3.25 billion.
Nvidia (NVDA.US) is now trading at its lowest price-to-earnings (P/E) ratio in seven years, as geopolitical tensions and concerns over AI returns weigh heavily on investor sentiment.
Valuation Compression Signals Market Caution
Nvidia’s forward P/E has dropped to ~19.6x, falling below the S&P 500 average (~20x) — an unusual shift for a high-growth technology leader.
The decline follows a ~20% drop from its October peak, wiping out over US$800 billion in market value, despite strong fundamentals.
War and Inflation Fears Drive Selloff
The broader market downturn, triggered by the Middle East conflict, has raised concerns that:
- Oil prices will remain elevated
- Inflation could reaccelerate
- Central banks may delay rate cuts or tighten policy
These macro risks have pressured high-growth tech stocks, including Nvidia.
AI Spending Concerns Weigh on Outlook
Investor sentiment has also been hit by doubts around AI monetisation timelines.
Major customers — including Microsoft, Alphabet, and Amazon — are investing heavily in AI infrastructure, but returns may take longer to materialise.
This raises concerns about:
- Demand sustainability for AI chips
- Near-term earnings visibility
Strong Growth Outlook Still Intact
Despite the valuation reset, Nvidia’s fundamentals remain robust:
- Gross margins at ~75%
- Expected earnings growth >70% this fiscal year
This suggests the current valuation compression is driven more by sentiment and macro risks than operational weakness.
Rising Competition and Disruption Risks
Investors are also factoring in long-term competitive risks.
The rapid evolution of AI technology raises the possibility that:
- New entrants could challenge Nvidia’s dominance
- Technological shifts could reduce reliance on its chips
Relative Valuation Now Attractive?
Some analysts view Nvidia’s current valuation as compelling, given:
- Lower P/E than the broader market
- Significantly higher growth profile
This creates a potential risk-reward opportunity, though tied to macro uncertainty.
Investor Takeaways
- Nvidia’s P/E has fallen to a 7-year low (~19.6x), below the S&P 500 average.
- Shares are down ~20% from peak, reflecting macro and AI-related concerns.
- War-driven inflation risks are weighing on tech valuations.
- Questions around AI monetisation timelines are pressuring sentiment.
- Long-term growth remains strong, but near-term volatility is likely to persist.
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