Nvidia Stock Won't Be Overvalued by 2028: My Case for Buying NVDA Today
Nvidia remains richly valued, but its AI-driven growth and strong market position could make today's price look very, very reasonable by 2028.
Overview
I do not think Nvidia (NASDAQ: NVDA) is wildly overvalued right now, and that's after a day when the stock posted strong earnings and management issued a bullish forecast, sending the stock up 8.7%. I don't think it's overvalued because its current valuation multiple is near multiyear lows, while its earnings and AI dominance are still compounding at rates that make today's price look reasonable. By 2028, if management delivers anything close to management's current guidance, this stock will be a great buy now.
When I look at Nvidia, I start with the basic math. The stock trades around a mid-30s trailing price-to-earnings ratio and a low-20s forward price-to-earnings ratio, levels that are actually below its 10-year average and far under the 50-plus multiples it carried at earlier stages of the AI boom. On top of that, its price-to-earnings-to-growth (PEG) ratio, which compares the valuation to expected growth, sits near 0.5, a signal that the market is not aggressively overpaying for the growth analysts are modeling over the next few years.
Details
In plain English, investors are paying a premium, but it is a smaller one than they used to pay for Nvidia, and it has come down even as the business has exploded.
Source
Originally published at www.fool.com.