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Nvidia is valued at about the same level as its peers.
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Nvidia’s new architecture will bring increased spending.
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The return of sales to China will boost Nvidia in 2026.
Nvidia (NASDAQ: NVDA) is the world’s largest company, sitting at a $4.6 trillion market cap. It rose to this level in 2025 after three years of impressive growth, thanks to massive spending from companies in the artificial intelligence (AI) realm. However, many investors are worried that Nvidia may be losing its edge or won’t be as successful a stock pick for 2026.
This is a big deal, as many investors have large exposure to Nvidia either through individual holdings or in an index. Is Nvidia stock in trouble this year? Or is there still room to run?
First, let’s address one of investors’ primary concerns: Is Nvidia overvalued? Nvidia is fully profitable, so using the price-to-earnings (P/E) metric is a great way to value the stock. However, it’s also growing rapidly, so using the trailing P/E ratio isn’t the best move. Using the trailing P/E in conjunction with its forward earnings multiple is a great way to assess the stock, and Nvidia doesn’t look too pricey from either measure.
47 times trailing earnings may seem like a lot, but with Nvidia’s revenue growth coming in at 62% year over year in third-quarter fiscal year 2026 (ending Oct. 26, 2025), that isn’t all that expensive. If you compare Nvidia’s growth rate to some of its big tech peers alongside its valuation, it’s clear that Nvidia has a premium, but at a much faster growth rate.
Now, once 2026 earnings projections are used, this overvalued narrative is flipped on its head.
That’s because Nvidia is expected to deliver impressive growth again in 2026 (which makes up most of Nvidia’s FY 2027, ending January 2027). Wall Street analysts project that Nvidia will deliver 50% revenue growth next year, which is an incredible sign for the company.
That alone makes Nvidia worth considering, but it isn’t planning on stopping there.
It’s no secret that AI hyperscalers are spending massive amounts of money on data center construction. While this money flows to multiple businesses, computing units suppliers like Nvidia receive the largest chunk of the pie. So, when you hear about a new data center project, Nvidia is likely a massive recipient.
Nvidia is also launching a new chip architecture in 2026, Rubin. The gains from this new chip design will be massive, but also cause an infrastructure change because Rubin utilizes 800-volt power. Nvidia also sells many components necessary for this change, so it will benefit in more ways than one. Even its existing Blackwell chips are sold out — a strong sign that Nvidia’s graphics processing units (GPUs) are still the most desirable products in the AI computing realm.
