There are very few people willing to associate the word “cheap” with Nvidia‘s (NASDAQ: NVDA) stock, but that’s exactly the right adjective. The last time the stock’s forward price-to-earnings ratio was this low — less than a year ago — in the six months that followed, it racked up returns that nearly caused it to double.
Nothing has really changed in its growth rates since that last rise, so I think the stock could be positioned to do it again. At the very least, I expect it will dramatically outperform the market, making it a great buy.
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In April 2025, the markets were shaken by President Donald Trump’s tariff plans, as concerns soared that those taxes would crater the economy.
Trump backed down from some of his original proposed tariffs, but he left many in place and added others. Yet so far, the U.S. economy continues to churn ahead. The market moves a lot faster than the economy or sentiment, which is why it rapidly recovered from the lows it sank to during April and May.
During that trough, Nvidia’s stock traded at about 24 times forward earnings. As the market recovered, the stock rocketed higher to more than 40 times forward earnings, delivering an impressive 81% return along the way.
However, tech stocks have pulled back from the highs that they established in late October to early November, and Nvidia is down around 10% or so from its peak. However, the stock now trades at 25 times forward earnings, which is just slightly more expensive than where it was after it plunged last spring. In my view, that discounted price is investors’ ticket to huge returns, particularly considering that the AI computing market is still huge and growing.
Nvidia makes graphics processing units (GPUs), and its products remain the top choices in AI computing, despite intensifying competition. Furthermore, all of the AI hyperscalers have announced record-setting capital expenditure plans for 2026, after previously setting records in 2024 and 2025.
The chip giant’s management team believes that this trend will continue for years. It predicts that by 2030, global data center capex will reach $3 trillion to $4 trillion annually. If that turns out to be an accurate forecast, the GPU maker will be a huge beneficiary of that spending.
This keeps the company’s multiyear growth trajectory intact, making it a top stock to consider right now. For Nvidia’s fiscal 2027 (which will end in January 2027), Wall Street analysts expect its revenue to increase by 52%, only a slight slowdown on a percentage basis from fiscal 2026’s expected 63% growth. Other factors could allow it to outpace that predicted rate, such as greater-than-expected sales to China or a better-than-anticipated rollout of its new Rubin architecture.