Artificial intelligence (AI) is rapidly transforming the global economy. The ability of technology to automate complex workflows and provide predictive insights has guided us through a new era of business efficiency, amplifying human creativity. Perhaps no other company has played a bigger role in the AI revolution than Nvidia. (NVDA) 1.92%)). Chip Giant’s accelerated computing GPUs are recognized as the backbone of AI infrastructure and are powered by the most innovative applications.
The success has paid off beautifully with Nvidia stock, which has returned a whopping 1,604% over the past five years. Some investors may look at their performance and assume that the stock is either too high or overvalued. That way of thinking risks looking down on the big picture, Nvidia’s huge growth and revenue momentum.
Given these basic tailwinds, Nvidia’s inventory could still be at an attractive price. This is why.
Nvidia Stocks offer good value
The latest financial trends from Nvidia were outstanding. Revenue for the fiscal year ended January 26th rose 114% year-on-year, increasing its earnings per share (EPS) adjusted earnings per share (EPS) to $2.99, an additional 130% increase from last year. Wall Street Analyst Finance, tracked by Yahoo!, is hoping to continue its fierce pace, projecting an additional 56% revenue growth this year with an EPS target of $4.50 for fiscal year 2026.
As a result, NVIDIA shares currently trade at a forward price (P/E) ratio of 26, well below the company’s five-year average of over 70 in revenue multiples. On this scale, Nvidia’s stock looks absolutely cheap, but there is no indication that demand for AI chips is particularly slowing.
NVDA PE ratio (forward) data by YCHARTS
What’s next for Nvidia stock?
A single data point or valuation metric does not have a single data point or valuation metric that determines whether the inventory is inexpensive or expensive. The good news is that Nvidia is well located to maintain control of AI. With AI adoption accelerating globally, Nvidia remains a best-in-class stock for exposure to the high-tech sector.
Dan Victor has no position in any of the stocks mentioned. Motley Fool has a job at Nvidia and recommends. Motley Fools have a disclosure policy.
