Nvidia (NASDAQ: NVDA) shares started October with a bang. After an epic meltdown over the summer, things are starting to look up. A lofty valuation and concerns about the current state of artificial intelligence (AI) gave investors pause, sending the AI chip specialist down as much as 27%. However, Nvidia regained its footing early last month and has achieved an increase of more than 29% in the four weeks since.
The stock extended its price today, rising as much as 4.5%. By the time the market closed, the stock was still up 4.1%.
After a rally of that magnitude, investors are wondering if the stock is still a buy.
There are plenty of bullish signs
Nvidia stock has enjoyed a blistering rally since early last year, with the stock gaining more than 800%. The advent of AI caused a huge shake-up for the company’s graphics processing units (GPUs), which have the raw computing power needed to process AI. This insatiable demand was reflected in Nvidia’s results, as the company generated five consecutive quarters of triple-digit annualized revenue and profit growth. However, when the company forecast revenue growth of “only” 80%, fair-weather investors thought the sky was falling and headed for the hills. That could have been a costly blunder.
In an interview last week, CEO Jensen Huang said demand for Nvidia’s next-generation Blackwell AI architecture is “insane.” He went on to say, “Everyone wants to have the most, and everyone wants to be first.” This is in stark contrast to recent fears that demand for AI has peaked.
Wall Street continues to bet big on Nvidia. Cantor Fitzgerald analyst CJ Muse is representative of the sentiment among analysts, noting that Nvidia has “the best positive consensus” of all the stocks he covers, saying it is “by far our top pick.”
The forest for the trees
One of the biggest sticking points for investors has been Nvidia’s high valuation, and at 62 times earnings, that concern is understandable. However, for Nvidia’s 2026 fiscal year (which starts in January), Wall Street forecasts earnings per share of $4.02. At the current share price of about $133, that equates to about 33 times forward earnings, which is only a small premium to the company’s multiple of 30. S&P500.
That’s an attractive price to pay for a company So many ways to win.
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Danny Vena holds positions at Nvidia. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool has one disclosure policy.
Nvidia shares are up (again) today and are near a new all-time high. Is the stock still a buy? was originally published by The Motley Fool
