Should You Buy Nvidia Stock in October? What Its Decade-Low Valuation Signals

Nvidia (NASDAQ: NVDA) has been the "go-to" stock for investors looking for an artificial intelligence (AI) win. The company has built a massive business that revolves around this high-growth industry, offering chips, complete systems, enterprise software, and more. All of this has translated into explosive revenue growth -- and the stock price has climbed in lockstep during most of this journey.

This year, Nvidia stock is still on the rise, but momentum has slowed amid investors' concerns about inflation and geopolitical problems. These worries often weigh on demand for growth-oriented stocks like Nvidia and other AI players as they depend on a strong economy. At the same time, some investors have also questioned the pace of investment in AI infrastructure and worry that any slowdown could be bad news for Nvidia.

Considering the full picture, should you buy Nvidia stock in October? Here's what its decade-low valuation signals.

Image source: Getty Images.

The three reasons behind Nvidia's successes

Before we talk valuation, let's take a look at the Nvidia story so far. This tech giant became an AI superpower for three reasons: First, it has the right product. Nvidia makes the world's top-performing graphics processing units, offering the speed and efficiency that make them perfect for AI workloads. Second, Nvidia recognized this well before the AI boom began and got in early. The company shifted the focus of its GPUs to AI about a decade ago. Finally, Nvidia regularly updates its GPUs, and this makes it difficult for rivals -- who started serving the AI market later in the story -- to catch up.

As I mentioned earlier, Nvidia hasn't stuck with only GPUs. The company expanded to offer a great variety of products and services so that customers don't have to seek out solutions from a number of providers. They could turn uniquely to Nvidia for a complete package. The company has also developed platforms to serve specific industries, such as automotive, and has expanded its reach through the AI ecosystem. For example, Nvidia recently agreed to buy open-source AI platform Hugging Face for more than $12 billion, a move that could further boost the popularity of the company's products and services.

Nvidia's efforts in the AI space have produced tremendous results from an earnings perspective, too. The company has delivered double- and triple-digit growth quarter after quarter in recent years. In the latest three-month period, revenue and profit climbed in the triple digits to $96 billion and $59 billion, respectively.

Nvidia's stock price momentum has slowed

Still, Nvidia's stock hasn't been as buoyant as it was over the past few years. After climbing 1,100% over the past three calendar years, Nvidia now is heading for a 20% increase in 2026. This isn't due to a specific problem at Nvidia, but instead to the market headwinds I spoke of above.

So, now the question is: Should you buy Nvidia stock in October? A great place to start is with a look at valuation. Nvidia's has tumbled, and the stock trades at 28x trailing 12-month earnings, near its lowest level in a decade.

This could be a rare bargain buying opportunity, considering Nvidia's role and strength in the AI market. As we can see from the chart below, after reaching such levels in the past, Nvidia went on to gain.

NVDA data by YCharts

Of course, it's important to note that the general market environment or even a temporary pause in AI spending could slow down the stock's progression. But these elements don't change the long-term AI outlook. Analysts expect the AI market to advance into the trillions of dollars as of early next decade, and this is supported by the idea that AI is in the early days of its real-world-use story. The technology has been developed, and it continues to develop, but the application of it is just beginning, and this suggests there's room for growth for many years to come.

Nvidia, as a chip designer that's proven its ability to maintain its lead and grow its presence, is well-positioned to benefit. That's why it's a great idea for long-term investors to buy Nvidia stock now in October, while it's trading at a decade-low valuation.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.