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Nvidia’s stock is attractively valued.
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The company’s growth has been outstanding, and it’s one of the biggest beneficiaries of the AI infrastructure boom.
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While competition has increased, Nvidia is still well-positioned to be a long-term AI winner.
At a forward price-to-earnings (P/E) ratio of around 24 times based on analyst 2026 consensus, and a forward price/earnings-to-growth (PEG) ratio of 0.65 (with positive PEG ratios below 1 considered undervalued), Nvidia (NASDAQ: NVDA) is one of the top growth stocks trading at a value price.
The company’s growth has been extraordinary. It grew its revenue by 62% last quarter to $57 billion, but even more impressive was that this was a nearly tenfold increase from the $5.9 billion in revenue it produced in the third quarter of fiscal 2023. However, its strong growth is far from over.
Nvidia has become one of the biggest beneficiaries of the artificial intelligence (AI) infrastructure buildout, and all signs point to this spending continuing to ramp up well into the future. Several companies are racing to develop the best foundational large language models (LLMs), and except for Alphabet, they all rely on Nvidia’s graphics processing units (GPUs) to train their models.
Meanwhile, cloud computing companies are spending huge amounts of money to build out AI data centers to try to keep up with surging demand for computing power and AI services. AI has also become more than companies racing to win these battles, as entire countries are placing big bets on AI.
While Nvidia is starting to see increased competition, it is still in the catbird seat. Custom AI ASICs (application-specific integrated circuits) are preprogrammed and lack the flexibility and adaptability of GPUs in a quickly changing tech landscape. Meanwhile, nearly all foundational AI code was written on its CUDA software platform that’s optimized for its chips. Its proprietary NVLink interconnect system creates an additional advantage. NVLink lets its chips communicate with each other more quickly, allowing them to essentially act as one powerful unit.
With its networking portfolio, Nvidia has also positioned itself to be more than just a GPU maker. The company is now delivering turnkey AI solutions that not only include GPUs, but also some of its other chips and networking components. In fact, networking has been the fastest-growing part of its business, with revenue surging 162% last quarter to $8.2 billion.