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Over the past three years, Nvidia (NASDAQ:NVDA) stock has climbed by over 1,200% to dizzyingly high levels. It is now the most valuable company in the world and has a $4.63 trillion market capitalization. However, Nvidia is actually cheaper today than it was back then.
Investors were proactive for a brief period in early 2023 as the stock went explosive, and many didn’t wish to miss the train. Since then, the rally has turned more reactive. The stock price has been following Nvidia’s earnings, so the premium paid for the stock has been shrinking.
What’s more surprising is that NVDA stock is now cheaper than Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD). Nvidia trades at just over 25 times forward earnings, whereas INTC trades at 61 times forward earnings and AMD trades at 33 times forward earnings. Both of those companies have worse margins and growth… so what gives?
Let’s take a look at why Nvidia is now comparatively cheap and where I see it a year from now.
Wall Street is desensitized to Nvidia, but the company is powering on
Nvidia’s earnings reports early on caught Wall Street’s attention with impressive earnings beats that only got wider and wider. Some of the most bullish analyst consensus estimates were trounced quarter after quarter, but this quickly became the norm.
Paradoxically, these large wins turned heads but also looked too good to be true. Many still believe Nvidia is destined to end up like Cisco (NASDAQ:CSCO) after the Dot Com bubble.
That said, the current rally has been going on for longer and is supported by durable profits and high margins. Nvidia also claims to have $275 billion of backlog for 2026, and that number is expected to swell even further. Most analysts expect revenue growth to continue due to orders continuing to pick up speed, with even older chips being put into use by hyperscalers.
Analysts expect $319.41 billion in FY 2027 revenue (ends in January 2027). The highest estimate goes up to $412.5 billion, which is very much possible if Nvidia can convert its backlog into revenue quickly and keep receiving orders.
Why some investors fancy the underdogs
Nvidia has left all its AI GPU competitors in the dust with a market share well over 90%. Wall Street loves a good underdog story, though, so many are investing heavily in AMD and INTC stock. Neither company has products that can compete with those of Nvidia’s yet, but they are still full of potential and may be worth “overpaying” for.
AMD has a $350 billion market cap, with Intel’s market cap at $172.67 billion. If they can capture even a 10% slice of the GPU market each, the returns will be parabolic. On the other hand, it is hard to see Nvidia becoming a multibagger investment as it is already huge.
In the coming years, it is expected that the demand for AI chips will focus more on inference and cost-effectiveness. These are two scopes where both AMD and Intel can put up a fight.
Where NVDA stock can be in 2026
If we take the lowest FY 2027 revenue estimate of $226 billion, take a 55% net margin, and slap the current trailing price-earnings ratio of 47x on it, Nvidia’s market cap will still be $5.84 trillion next year. But again, that is a very lowball estimate, and Wall Street has been paying 50-55 times earnings throughout this rally.
The April selloff took NVDA stock down to 35 times earnings momentarily. Nvidia will be at $4.35 trillion even at that multiple.
Thus, my bear case puts NVDA stock at ~$178 in 2026. That’s a very small decline.
I believe it’s more likely that revenue will end up somewhere near $330 billion in FY 2027 as that backlog expands. I also expect net margin to remain near 55%, meaning profits at around the $181.5 billion ballpark.
If NVDA stock continues trading ~50 times earnings, that implies 96% upside to $373.43. This bull case estimate is close to Tigress Financial’s $350 price target on Nvidia, which is the highest.
Regardless, the upside potential is massive, and the downside risk is no longer as pronounced as earnings have caught up and then some. I’d tag NVDA stock as a buy going into 2026.