Nvidia (NVDA, Financials) surged over 45% from its April low, adding $1 trillion in value and closing in on Microsoft's (MSFT, Financials) spot as the world's most valuable company, according to Bloomberg.
Despite the sharp rally, Nvidia trades at about 29 times projected earnings over the next 12 months — below its 10-year average of 34 times. The stock's price-to-earnings-to-growth ratio is under 0.9, the lowest among major tech peers, signaling potential undervaluation. Bloomberg data shows analysts remain bullish, with 69 of 78 rating the stock a buy and only one issuing a sell. The average price target implies a further 24% upside.
Investors have shaken off early-year concerns tied to U.S.-China tensions and semiconductor sales restrictions. Bloomberg reported Nvidia lost $2.5 billion in Q1 sales from a China chip ban and expects an $8 billion hit in Q2, but demand elsewhere appears strong. U.S. tech giants — including Microsoft, Amazon (AMZN, Financials), Alphabet (GOOG, Financials) and Meta Meta Platforms (META, Financials) — are projected to spend $330 billion on AI infrastructure in 2026, up 6% from 2025, helping sustain Nvidia's growth momentum.
Still, trade exposure lingers. China contributed 13% of Nvidia's revenue in Q1. With President Trump's administration threatening broader tech restrictions, Nvidia could face further headwinds. CEO Jensen Huang said no new China-focused products are planned for now, but the company is monitoring the policy environment.
Nvidia's relatively low institutional ownership — 74% of long-only funds, compared with 91% for Microsoft — leaves room for additional buying pressure. Analysts like Samuel Rines of WisdomTree argue Nvidia's earnings multiple could rise into the high 30s or low 40s as AI capex accelerates.
Investors will continue to watch for signals from Washington on trade, as well as ongoing data center demand trends.
