Key Points
Nvidia just closed another incredible quarter.
Nvidia's valuation is normally far higher than it is right now.
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Nvidia (NASDAQ: NVDA) stock has had a lackluster year by its standards. It's up about 13% so far, which would be OK in a normal year because the S&P 500 (SNPINDEX: ^GSPC) typically averages about a 10% return in a year.
But this isn't a normal year. The S&P 500 is already up 11% so far, and the S&P 500 technology-only sector is up nearly 25%. With the average tech stock showing more than double Nvidia's performance so far in 2026, investors may be starting to get a bit impatient with Nvidia's stock.
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However, I think they need to stick it out.
Nvidia is primed to deliver solid returns throughout the rest of 2026, and I think it could start to catch fire in June. The risk-reward profile for Nvidia's stock is fantastic right now, and I won't be surprised if it catches up or surpasses the technology sector this month.
Image source: The Motley Fool.
Nvidia is trading at an attractive valuation
Nvidia has been absolutely crushing it in 2026. Demand for its graphics processing units (GPUs) has never been higher, and data center build-out rates appear to be rising. During Nvidia's latest conference call, it projected that 2027 AI hyperscaler capital expenditures will rise to $1 trillion next year. That opens the door for another year of solid growth, potentially allowing Nvidia to extend its recent jaw-dropping growth rates.
During its latest quarter, Nvidia exceeded expectations and delivered an impressive 85% growth rate. There are very few companies that rival that growth pace, making Nvidia one of the fastest-growing stocks in the entire market. Despite that, it trails many of its peers from a valuation standpoint.
Compared to other big tech AI investments, Nvidia is valued at some of the lowest levels, from a forward price-to-earnings (P/E) ratio standpoint.
NVDA PE Ratio (Forward) data by YCharts.
That makes now an attractive time to invest in Nvidia, because if it can rise to a forward P/E in the high-20s, it could easily produce solid returns for investors this June. However, I don't think these three companies are great comparisons. Instead, investors should be comparing Nvidia to other AI-focused stock picks, like AMD, Broadcom, and Taiwan Semiconductor. When you compare it to these three, Nvidia's stock looks even cheaper.
NVDA PE Ratio (Forward) data by YCharts.
When compared to these three, Nvidia's stock looks even cheaper, as its valuation could nearly double and still look right at home. Nvidia's time is coming, and June could be the start. Few companies are growing as fast as Nvidia with as cheap a price tag. With 2027 also looking like another growth year for Nvidia, it's the perfect time to invest in the stock before it starts to move higher throughout the rest of 2026.
Should you buy stock in Nvidia right now?
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Keithen Drury has positions in Alphabet, Broadcom, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Broadcom, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
