The Last Time Nvidia Stock Was This Cheap, It Nearly Doubled in 6 Months. Can It Repeat?

There are very few people willing to associate the word "cheap" with Nvidia's (NASDAQ: NVDA) stock, but that's exactly the right adjective. The last time the stock's forward price-to-earnings ratio was this low -- less than a year ago -- in the six months that followed, it racked up returns that nearly caused it to double.

Nothing has really changed in its growth rates since that last rise, so I think the stock could be positioned to do it again. At the very least, I expect it will dramatically outperform the market, making it a great buy.

Image source: Getty Images.

Nvidia's stock looks primed to rise

In April 2025, the markets were shaken by President Donald Trump's tariff plans, as concerns soared that those taxes would crater the economy.

Trump backed down from some of his original proposed tariffs, but he left many in place and added others. Yet so far, the U.S. economy continues to churn ahead. The market moves a lot faster than the economy or sentiment, which is why it rapidly recovered from the lows it sank to during April and May.

During that trough, Nvidia's stock traded at about 24 times forward earnings. As the market recovered, the stock rocketed higher to more than 40 times forward earnings, delivering an impressive 81% return along the way.

NVDA PE Ratio (Forward) data by YCharts; PE = price to earnings.

However, tech stocks have pulled back from the highs that they established in late October to early November, and Nvidia is down around 10% or so from its peak. However, the stock now trades at 25 times forward earnings, which is just slightly more expensive than where it was after it plunged last spring. In my view, that discounted price is investors' ticket to huge returns, particularly considering that the AI computing market is still huge and growing.

Nvidia's AI accelerators remain the most popular

Nvidia makes graphics processing units (GPUs), and its products remain the top choices in AI computing, despite intensifying competition. Furthermore, all of the AI hyperscalers have announced record-setting capital expenditure plans for 2026, after previously setting records in 2024 and 2025.

The chip giant's management team believes that this trend will continue for years. It predicts that by 2030, global data center capex will reach $3 trillion to $4 trillion annually. If that turns out to be an accurate forecast, the GPU maker will be a huge beneficiary of that spending.

This keeps the company's multiyear growth trajectory intact, making it a top stock to consider right now. For Nvidia's fiscal 2027 (which will end in January 2027), Wall Street analysts expect its revenue to increase by 52%, only a slight slowdown on a percentage basis from fiscal 2026's expected 63% growth. Other factors could allow it to outpace that predicted rate, such as greater-than-expected sales to China or a better-than-anticipated rollout of its new Rubin architecture.

Regardless, Nvidia is still the top way to play the AI spending spree because it's making money from the trend right now. The verdict is still out on whether generative AI will be as much of a game-changer as some pundits anticipate. But meanwhile, AI hyperscalers are going all-in on building out the infrastructure to support the technology, and they're buying all the Nvidia equipment they can get to do so.

This should result in incredible returns for Nvi shareholders over the next few years. Even if the stock doesn't double in 2026, I bet it will by 2027. It's rare to find a stock that can double over the course of just two years. Nvidia looks like a pretty safe bet to do so, as all it would take is for it to return to its normal valuation range.

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.