Nvidia's Rubin Chip Arrives in Late 2026. Is Now the Time to Buy This Artificial Intelligence (AI) Stock?

Nvidia (NASDAQ: NVDA) is the poster child of the artificial intelligence (AI) industry. Its high-powered chips are the brains that power AI. The company's leading position in the chip industry isn't lost on Wall Street, with the stock up 50% over the past year and over 18,000% over the past decade.

That said, Nvidia's stock is down nearly 20% from its 52-week high, and it has a new chip platform on the way in late 2026. Is now the time to buy this stock, or should investors just keep it on their wish list?

Nvidia looks cheap or expensive, depending on how you view it

Nvidia's stock has fallen sharply in recent months. The AI stock's price drop puts it firmly in correction territory and on the verge of falling into its own personal bear market. The stock looks cheap relative to its own history.

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For example, Nvidia's five-year average price-to-earnings ratio is around 64x, but its current P/E is only 34x. Its five-year average price-to-book ratio is 30x, but its current P/B ratio is just under 26x. If you are a long-term believer in AI's ability to change the world, this may appear like an opportunity to add a leading AI company to your portfolio at a reasonable price.

There's only one problem: the stock still looks expensive on an absolute level. For example, the average technology stock has a P/E ratio of around 34x and an average P/B ratio of 8.5x. The S&P 500 index (SNPINDEX: ^GSPC) has an average P/E of roughly 28x and a P/B ratio of 5x. If you have a value bias, you'll probably find that Nvidia is still too expensive to buy.

AI in the face of higher oil prices

Beyond valuation, there's another issue that needs careful consideration: rising oil and natural gas prices. The geopolitical conflict in the Middle East has driven energy prices sharply higher. Higher energy prices reverberate through the economy; they don't just impact the price of gasoline.

For example, natural gas is a key fuel for many electric utilities. That will likely lead to higher electricity costs, as rising natural gas prices are passed on to customers. AI uses a significant amount of electricity, so higher energy prices could make AI more expensive to use.

Also, building out AI infrastructure is the next big leg in AI development. Oil and natural gas are used throughout the construction and materials sectors. Higher energy costs will make it more expensive to build data centers and more costly to expand the electricity grid to power those data centers.

Those are just a few examples of how AI could be impacted. Higher energy prices will also make basic necessities like food and clothing more expensive. There were already recession fears, with consumers trading down to lower-priced stores to tighten their budgets. If higher energy prices lead to a broader economic pullback, it wouldn't be surprising to see major capital investment projects, such as AI infrastructure spending, put on hold as well. Some projects could even be canceled.

Most investors should probably keep Nvidia on their wish list

Given the market backdrop, it wouldn't be shocking to see the AI bubble that pushed Nvidia and the broader market higher for years continue to deflate. Given that Wall Street has a bad habit of going too far in both the positive and negative directions, Nvidia's current decline could easily keep going.

Unless you believe very strongly in the future of AI, you should probably watch Nvidia from the sidelines. Notably, it took a quarter of a century for dot-com darling Cisco (NASDAQ: CSCO) to work its way back from its deep drawdown after the dot-com bubble burst at the turn of the century. If the AI bubble bursts, you'll likely have plenty of time to buy Nvidia stock and possibly at even more attractive prices.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems and Nvidia. The Motley Fool has a disclosure policy.