Nvidia Stock Hasn't Been This Cheap In Nearly a Year. Here's What History Says Happens Next.

For as dominant a run as Nvidia (NASDAQ: NVDA) has been on over the past few years, the last few months have been rather boring. Since Aug. 1, 2025, the stock has risen a relatively slim 5%. Over that same time frame, the S&P 500 is up around 10%. This is disappointing for many investors (myself included) because Nvidia has been posting unbelievable results along the way. In fact, Nvidia's stock hasn't been this cheap in some time.

I think Nvidia's stock being this cheap is a clear buying sign, and investors should consider loading up on the stock now because history has taught us over the past few years that now is the time to load up on Nvidia stock.

Image source: Nvidia.

Nvidia's stock isn't as expensive as you may think

The big question is: How should I value Nvidia stock? There are several valuation techniques investors can use, including using trailing or forward earnings. Trailing earnings are usually a solid way to price a stock, but can be affected by one-time charges (like when Nvidia had to write down chip inventory that was slated to be sold to China in Q1 last year). You can also use the forward earnings metric, which uses analyst estimates. Those are projections, and a company could miss (or exceed) them. Both of these metrics clearly have flaws, but I think using them in tandem is a great way to assess where a stock is currently valued.

From the price-to-earnings standpoint, Nvidia's stock trades at nearly the same lows it traded at during the tariff sell-off in April 2025.

NVDA PE Ratio data by YCharts

If you bought the stock on April 1, you made a quick 57% return in four months. That's not a bad setup, and if Nvidia could duplicate a run like that, investors would be thrilled.

On another note, 37 times earnings may sound expensive, but when you compare it to some other popular investments, it really isn't. Costco trades for 54 times trailing earnings. Walmart is almost identical at 37.2 times earnings. On the tech side, Apple and Amazon trade for 33 and 31 times trailing earnings, respectively. None of these companies is growing remotely as fast as Nvidia, and none of them has massive tailwinds pushing them higher like the artificial intelligence (AI) build-out that Nvidia is riding. Furthermore, its trailing earnings metric is artificially high due to the one-time effect during Q1 last year.

So, to say that Nvidia is overvalued at 37 times trailing earnings isn't fair. I wouldn't be surprised if the stock returns to a 50 times earnings valuation sometime throughout 2026, making it a solid stock to consider now. But what about its future valuation?

Nvidia looks like a steal from a forward earnings standpoint

According to the forward earnings valuation, Nvidia's stock is unfathomably cheap.

NVDA PE Ratio (Forward) data by YCharts

At 22.1 times forward earnings, it's almost the same price tag as the S&P 500, which trades for 21.9 times forward earnings. During its last quarter, Nvidia grew its revenue at a 73% year-over-year pace. Next quarter, it's expected to grow at a 77% pace. That doesn't sound like a company that should trade at a market-average premium, but that's exactly where Nvidia finds itself.

Furthermore, with the AI build-out expected to last through at least 2030, Nvidia's earnings aren't going anywhere anytime soon. As a result, I think now is the perfect time to start scooping up Nvidia shares. I won't be surprised to see Nvidia's stock catch fire sometime in 2026 and return to its normal valuation levels, which will lead to outstanding returns for shareholders. History tells us that Nvidia's stock doesn't stay beaten down for long, and investors shouldn't wait too long or they may miss a golden investment opportunity.

Keithen Drury has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Apple, Costco Wholesale, Nvidia, and Walmart. The Motley Fool has a disclosure policy.