Nvidia's Undervalued Stock Could Soar as Earnings Double
Nvidia's revenue is expected to nearly double in its second quarter, making the stock look like a good value. The company dominates the market for data center GPUs with around 90% share and has significant growth potential in the physical AI market if robotics and autonomous vehicles go mainstream.
The demand from hyperscalers, AI start-ups, and SpaceX should continue to fuel its growth. SpaceX recently announced that it will build its AI infrastructure exclusively on Nvidia chips, which could set up a massive windfall for the company.
Nvidia CEO Jensen Huang has given $1 trillion in total revenue as a target for 2026-2027, implying the company could hit roughly $400 billion in revenue this year and $600 billion in fiscal 2028. The company's profits could double from 2026 to 2028.
Despite its high price-to-earnings ratio of 37.5, Nvidia is not overvalued according to some metrics. Its PEG ratio shows it's undervalued when looking out over the next few years, as earnings per share could double from fiscal 2027 to fiscal 2029.