Nvidia (NASDAQ: NVDA) stands out as a top stock to buy now, according to analysts who highlight a significant gap between the company's expected growth and its current valuation. The market has not yet priced in any of Nvidia's projected growth for 2027, creating a major investment opportunity. The company's forward price-to-earnings (P/E) ratio suggests that if Nvidia meets its earnings growth expectations and trades at a P/E of 28 by the end of its next fiscal year, the stock could double in value.
The growth thesis for Nvidia is based on solid forecasts, particularly its expected 70% revenue growth next year. This confidence stems from AI hyperscalers locking in their capital expenditure plans well in advance. Contracts for chips must be signed early to ensure that new data center facilities have the necessary components when they are operational. As a result, calculating Nvidia's earnings for next year is relatively straightforward.
Currently, Nvidia's trailing P/E ratio is 28, which is considered reasonable for a company of its caliber. If the stock does not move in price from now until next year and Nvidia hits Wall Street estimates, it will trade for less than 14 times earnings. This represents an incredibly cheap price, indicating substantial upside potential. Analysts believe that the AI companies will continue to spend aggressively on AI computing, benefiting Nvidia and other related firms.
Before investing in Nvidia, consider that The Motley Fool Stock Advisor analyst team identified 10 other stocks they believe are better buys at the moment. Historically, their recommendations have produced significant returns, such as a $1,000 investment in Netflix in 2004 growing to $391,581 and a $1,000 investment in Nvidia in 2005 growing to $1,334,780. The average return for Stock Advisor is 936%, significantly outperforming the S&P 500's 213% return.