Nvidia's Low Valuation May Lead to a Major Stock Rally

Nvidia's upcoming earnings report on August 26 is highly anticipated, and its past performance following Q2 reports is not encouraging. However, this time may be different due to the company's lower valuation level.

Looking at historical trends, Nvidia's share price performances after its Q2 reports over the past two years have been disappointing. But with a forward earnings valuation of 25 times, the stock appears reasonably priced compared to where it has traded historically.

The author believes that investors should begin loading up on shares now, as Nvidia's Q2 report could kick-start a major end-of-the-year rally in the stock. Even if the stock drops in the short term, the outlook for Nvidia is still strong due to its position as the king of AI computing units.

The author notes that Nvidia isn't even close to its historical valuation range, which was around 40 times forward earnings in 2024 and 2025. A return to this level would result in a quick 20% gain for investors.