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Artificial intelligence (AI) is reshaping industries, redefining efficiency, and unlocking human creativity like never before. At the heart of this transformation stands Nvidia (NVDA), a company whose powerful GPUs have become the backbone of AI infrastructure, driving cutting-edge advancements across the world.
Over the past three years, Nvidia’s stock has skyrocketed, delivering a 409.9% return to investors. Yet, despite its meteoric rise, recent fluctuations have stirred debate. However, Bernstein argues that Nvidia’s valuation remains attractive, driven by surging interest in AI and an upcoming product cycle, with the highly anticipated GTC 2025 AI conference on the horizon.
Given that, is now the correct time for investors to jump on this chip stock? Let’s find out.
About Nvidia Stock
With a market cap of nearly $2.8 trillion, Nvidia (NVDA) has firmly established itself as a powerhouse in the chip industry. Best known for its groundbreaking graphics processing units (GPUs), the company has become a driving force in gaming, professional visualization, data centers, and automotive technology.
Its headquarters in Santa Clara, California, serves as the nerve center for innovation, and in recent years, Nvidia has sharpened its focus on AI and accelerated computing. This strategic shift has been a game-changer for the company’s growth.
Over the past 52 weeks, NVDA’s stock has skyrocketed by 21.6%, leaving the S&P 500 Index ($SPX) trailing with its 9.3% gain.
Despite its meteoric rise, NVDA’s stock is surprisingly undervalued by some key measures. The company’s forward price-earnings (P/E) ratio stands at 26.71x, a discount to not only the tech sector average but also priced below its five-year average. Its forward price-sales ratio of 13.47 also sits 32.8% below its historical average. For a company at the forefront of AI and computing, these numbers suggest that NVDA might still have plenty of room to run.
Nvidia Surpasses on Q4 Earnings
On Feb. 26, Nvidia unveiled its fiscal 2025 fourth-quarter earnings, surpassing expectations and setting new records. For the quarter that ended Jan. 26, revenue surged to a record high of $39.3 billion, outpacing the guidance of $38.1 billion and soaring 77.9% year-over-year. Profitability followed suit. Adjusted EPS rose 71.2% annually to $0.89, surpassing estimates of $0.85.
At the heart of this explosive growth was the company’s dominance in data centers. Sales in this segment skyrocketed to $35.6 billion, nearly doubling from the previous year. Demand for Nvidia’s Blackwell AI semiconductor chips proved insatiable, bolstering its position as a leader in the AI revolution.
Collaborations with cloud powerhouses like Amazon (AMZN) and Microsoft (MSFT) further underscored its ever-expanding influence. However, Nvidia’s reach is not confined to AI and cloud computing alone. Strategic partnerships in the automotive sector, with industry titans like Toyota (TM) and Hyundai (HYMTF), added yet another layer of momentum.
For the first quarter of fiscal 2026, management projects revenue to reach $43 billion, with a possible variance of 2%. If achieved, this would mark a 65% growth compared to the same period last year. Profitability is expected to remain strong, with non-GAAP gross margins projected at 71%.
Analysts tracking Nvidia share the optimism. Projections indicate that Q1 EPS could surge 50% year over year to $0.87. Meanwhile, for fiscal 2026, EPS is expected to climb 41.3% to $4.14, followed by another 23.7% annual surge to $5.12 in fiscal 2027.
What Do Analysts Expect for Nvidia Stock?
Brokerage firm Bernstein remains confident in NVDA’s potential, with analyst Stacy Rasgon reaffirming an “Outperform” rating and a $185 price target. He pointed to the company’s Blackwell product cycle as a major driver of future growth, even though its launch faced initial hurdles.
Concerns over supply chain disruptions sparked volatility, but Nvidia moved quickly to resolve them. Post-earnings discussions confirmed that Blackwell’s Q4 revenue of $11 billion was fully shipped in January, and demand is now expected to exceed supply in the coming quarters.
Overall, analysts maintain a bullish outlook on NVDA, with a consensus rating of “Strong Buy.” Of the 44 analysts covering the stock, 38 recommend a “Strong Buy,” while two suggest a “Moderate Buy.” Meanwhile, four recommend a “Hold.”
The average price target of $177.59 represents potential upside of 65%, while the Street-high target of $220 suggests that the stock can climb as much as 105% from the current price level.
