Is Nvidia Overvalued?

Daily Profit Investing Research
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My brother just SOLD 50% of his stake in Nvidia.

I figured you might be wondering whether you should SELL Nvidia.

Nvidia (NASDAQ: NVDA) is the world’s most valuable company with a $4.4 trillion market cap. And it’s up 34% this year.

Nvidia is growing rapidly due to soaring demand for Artificial Intelligence chips. Check out the company’s earnings growth (note that NVDA fiscal year ends in January).

  • 2024: 288%
  • 2025: 131%
  • 2026: 46% (estimate)
  • 2027: 38% (estimate)

Shares are trading near an all-time high at $179.

NVDA is trading at 36x expected earnings over the next 12-months. That’s actually a 14% discount from its mean P/E.

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This chart shows NVDA forward P/E multiple over the last 5-years.

Here’s what this means…

Nvidia’s stock market gains are due to its earnings growth. The chart above shows that NVDA’s valuation has fallen during this period of rapid growth.

This suggests that NVDA shares are actually undervalued based on earnings expectations.

Let’s check out analyst estimates for the coming fiscal years (ending January). And the P/E multiple based on today’s share price.

  • 2026: $4.36 EPS / 41 P/E
  • 2027: $6.02 EPS / 30 P/E
  • 2028: $7.14 EPS / 25 /PE

The biggest risk to Nvidia is its earnings.

Nvidia is highly dependent on AI data center investments. So, if big tech companies slashed spending on AI that would certainly hurt Nvidia.

However, there remains strong signs that AI data center spending isn’t slowing down anytime soon. America’s big tech companies will soon be joined by companies in Europe and nations across the Middle East that are embracing the AI revolution.

I’d argue that the above earnings estimates are too conservative. And that Nvidia will likely beat these estimates.

So, how much could NVDA shares rise in the next couple years?

Let’s assume that Nvidia is trading at a P/E multiple of 41x 2028 EPS within 2-years.

That would translate into a share price of $293 – a 64% increase from the recent price.

That would be a pretty healthy gain for NVDA.

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Ian Wyatt

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