Nvidia Stock Soars as PEG Ratio Indicates Undervaluation
Nvidia's stock price has surged by 15% since July 29, but experts say it's not overvalued.
The company's trailing price-to-earnings ratio is high at 37.5, but considering its growth rate, Nvidia looks undervalued.
Its PEG ratio, which compares the price-to-earnings ratio to expected earnings growth, was just 0.62 as of August 2026, indicating a strong potential for future returns.
Nvidia's data center chips make up the bulk of its business, and revenue is expected to nearly double in fiscal Q2 2027, thanks in part to a major contract with SpaceX.
SpaceX will spend an estimated $150 billion-$250 billion on Nvidia chips by the end of 2027, setting up a massive windfall for the company.
Nvidia CEO Jensen Huang has set a target of $1 trillion in total revenue for 2026-2027, implying the company could hit roughly $400 billion in revenue this year and $600 billion in fiscal 2028.