Is Nvidia (NVDA) stock secretly “cheap”? That’s the question on some investors’ minds, especially after its recent dip.
Key Points
- Nvidia’s forward price-to-earnings ratio (P/E) is near levels last seen almost a year ago.
- Historically, such low P/E ratios have preceded significant stock price increases for Nvidia.
- The AI market continues to grow, positioning Nvidia to benefit from increasing capital expenditure (capex) in data centers.
- Analysts predict substantial revenue growth for Nvidia in the coming years.
Nvidia’s Stock Looks Primed to Rise
A Discounted Price?
Remember back in April 2025 when tariff concerns shook the markets? Nvidia’s (NVDA) stock traded around 24 times its forward earnings (a valuation metric comparing a company’s stock price to its future earnings). As the market rebounded, the stock soared to over 40 times forward earnings, delivering an 81% return.
Now, tech stocks have pulled back a bit. Nvidia is down about 10% from its peak. But it’s currently trading at 25 times forward earnings, a similar level to what it was after the spring dip. The author believes this “discounted price” is a great opportunity given the expanding AI market.
AI Dominance and Data Center Spending
Nvidia, the graphics processing unit (GPU) maker, remains the top dog in AI computing despite increased competition. Major AI players are planning record capital expenditures (capex) for 2026, following record spending in 2024 and 2025.
Nvidia’s management expects this trend to continue, forecasting global data center capex to reach $3 trillion to $4 trillion annually by 2030. If accurate, Nvidia is set to be a major beneficiary.
Growth Trajectory Intact
Wall Street analysts expect Nvidia’s revenue to increase by 52% in fiscal 2027 (ending January 2027). This follows an expected 63% growth in fiscal 2026. Factors like increased sales to China or successful launches of new architectures could drive even faster growth.
“The verdict is still out on whether generative AI will be as much of a game-changer as some pundits anticipate. But meanwhile, AI hyperscalers are going all-in on building out the infrastructure to support the technology, and they’re buying all the Nvidia equipment they can get to do so.”
The author predicts incredible returns for Nvidia shareholders over the next few years. They believe the stock could double by 2027, simply by returning to its normal valuation range.
Stocks Mentioned
- NVDA: $185.65, Up 8.01%
What This Means For You
- Consider Nvidia for long-term growth: If you believe in the future of AI, Nvidia (NVDA) could be a solid investment.
- Dollar-Cost Averaging: Given the stock’s volatility, consider buying in small increments over time.
- Watch for Key Catalysts: Keep an eye on data center spending reports and news about Nvidia’s new product launches.
- Diversify: Don’t put all your eggs in one basket. Make sure Nvidia is part of a well-diversified portfolio.
Source: www.fool.com
Disclosure: Trending Society does not provide investment advice. This article is for informational purposes only.
