After years of high-octane gains, Nvidia (NASDAQ: NVDA) stock seems to have run out of gas. Had an investor put £5,000 into the chip stock six months ago, that capital would now be worth about £4,800 (factoring in exchange rates).
Is it game-over for this legendary growth stock? Or is it just pausing for breath before its next leg higher?
Taking a breather
My view here is that it’s simply taking a breather. Between the start of 2023 and October 2025, the stock jumped from $20 to $200. At some stage, it was likely to experience a lengthy period of ‘consolidation’. I think that’s what we’re seeing now.
Get ready for the next move higher
I fully expect it to continue its ascent at some stage in the near future. Because the underlying fundamentals look very strong.
At last month’s GTC conference, for example, CEO Jensen Huang unveiled a bunch of powerful new products including the Vera Rubin AI platform (which is far more powerful than its current Blackwell platform), the Groq 3 inference chip, and a software platform for OpenClaw. He also announced the launch of a few partnerships for self-driving cars (which will use Nvidia’s self-driving tech).
Meanwhile, Huang said he now expects a whopping $1trn in revenue from Blackwell and Rubin chips through 2027. Late last year, the company was only expecting $500bn.
So it’s not like the growth story here has come to an end. If anything, growth appears to be accelerating.
Undervalued today
Note that after the recent dip in the share price, the stock’s starting to look very cheap. With analysts expecting earnings per share of $8.26 this financial year (versus $4.92 last financial year), the forward-looking price-to-earnings (P/E) ratio’s only 21 (near a seven-year low).
At that earnings multiple, the stock’s undervalued, in my view. It seems Wall Street analysts share my view here – currently the average price target is about 50% higher at $264.
Worth a closer look
Ill point out that in the current market environment (where investor sentiment’s weak due to economic and geopolitical uncertainty), the growth stock isn’t suddenly going to surge to $264. For the Nvidia share price to resume its long-term upward trend, we’ll need to see market conditions improve.
And of course, there’s no guarantee it will actually get to that price target. If spending on AI infrastructure from hyperscalers such as Microsoft and Amazon drops, or competitors (including the hyperscalers) launch powerful new AI chips, the growth story here could potentially be derailed.
Taking a long-term view however, I’m bullish on Nvidia as I expect the AI buildout to continue. I think it’s worth a closer look today while it’s around 15% below its highs.
