Nvidia’s stock has grown significantly cheaper on a relative basis even as the company continues to deliver some of the strongest earnings growth in the technology sector.
The artificial intelligence chipmaker now fits the profile of a growth-at-a-reasonable-price stock, a category that has historically attracted both value and growth-oriented investors.
Nvidia emerged as the biggest AI beneficiary in 2023, and as demand for its chips exploded, so did its stock price, pushing valuations to levels that made many investors nervous.
However, the company has continued to deliver strong earnings growth while its valuation has become more reasonable relative to forward growth projections, shifting the risk-reward calculus for many analysts.
The stock currently trades 30% below Morningstar’s $280 fair value estimate, a gap that implies significant upside for investors willing to take a long-term position in the company.
In its next fiscal year, Nvidia expects to grow its revenues by an impressive 70%, driven by increased spending from AI hyperscalers building out massive data center infrastructure around the world.
Nvidia estimates that the big five hyperscalers will spend nearly $800 billion on capital expenditures in 2026, with that figure projected to rise to $1.3 trillion the following year.
Global data center capital expenditures are expected to reach between $3 trillion and $4 trillion by 2030, a staggering level of investment that positions Nvidia as a central and indispensable supplier.
At 30 times trailing earnings, Nvidia (NVDA) trades at a meaningful discount to Apple (AAPL), which commands a multiple of 41 times trailing earnings despite far slower revenue growth.
Nvidia posted 85% earnings growth in its latest quarter, compared to Apple’s comparatively modest 17% growth rate over the same period, making the valuation gap between the two companies harder to justify.
A discounted cash flow model suggests an intrinsic value that sits meaningfully above Nvidia’s current share price, further bolstering the bull case for the stock.
Aswath Damodaran has argued that Nvidia is priced as the “greatest company ever,” a framing that helps explain why opinions on the stock remain so sharply divided among professional investors and analysts.
Given the high likelihood of strong AI capital expenditure in both the near and medium term, many analysts believe Nvidia’s growth prospects are significantly underrated by the broader market.
For investors who dismissed Nvidia as overvalued during its earlier run-up, the current combination of cooling valuation multiples and accelerating fundamentals may represent a rare second opportunity.
