After years of high-octane growth, Nvidia (NASDAQ: NVDA) appears to have run out of gas. If an investor had put £5,000 into chip stocks six months ago, that capital would now be worth around £4,800 (taking into account exchange rates).
Is it game over for this legendary growth plant? Or is he just holding his breath for the next leg higher?
Catching my breath
In my opinion, it’s just a moment to breathe. From the beginning of 2023 to October 2025, the share price increased from $20 to $200. There is likely to be a long period of ‘consolidation’ at some stage. I think that’s what we’re seeing now.
Get ready for the next move higher
I fully expect it to continue its growth in the near future. Because the basic foundations look very sturdy.
For example, at last month’s GTC conference, CEO Jensen Huang unveiled a number of powerful up-to-date products, including the Vera Rubin AI platform (which is significantly more powerful than Blackwell’s current platform), the Groq 3 inference chip, and a software platform for OpenClaw. He also announced the launch of several partnerships for autonomous cars (which will employ Nvidia’s autonomous driving technology).
Meanwhile, Huang said he now expects as much as $1 trillion in revenue from Blackwell and Rubin chips by 2027. At the end of last year, the company expected only $500 billion.
So it’s not like the growth story is over. In any case, growth appears to be accelerating.
Today underestimated
It’s significant to note that the stock is starting to look very budget-friendly after the recent drop in share prices. Analysts expect earnings per share to be $8.26 this fiscal year (up from $4.92 last year), so the forward-looking price-to-earnings (P/E) ratio will be just 21 (close to a seven-year low).
With this earnings multiple, the stock is undervalued in my opinion. Wall Street analysts appear to share my view – the current average price target is about 50% higher at $264.
It’s worth taking a closer look
I would like to note that in current market conditions (where investor sentiment is faint due to economic and geopolitical uncertainty), the value of a growth stock will not suddenly rise to $264. Market conditions will need to improve for Nvidia’s stock price to return to its long-term upward trend.
And of course, there’s no guarantee it will actually hit that target price. If AI infrastructure spending comes from hyperscalers like Microsoft AND Amazon declines or competitors (including hyperscalers) release powerful up-to-date AI chips, the growth story in this case could potentially be derailed.
However, looking long term, I am hopeful about Nvidia as I expect AI development to continue. I think it’s worth taking a closer look at today when it’s about 15% below its highs.
