Nvidia Stock Is Trading at a Shocking Valuation. Now Is the Perfect Time to Buy

Nvidia (NASDAQ: NVDA) hasn't been the workhorse stock it normally is in 2026. This year, it has risen around 11%, just barely outpacing the S&P 500, up just over 8%. That's not the market-crushing performance investors have come to expect from the world's largest company. Fortunately for investors, I think Nvidia's time is coming. The stock is trading at a shockingly low valuation right now, and it could be one of the best buying opportunities in years.

Let's take a look at Nvidia's valuation and see why right now is the perfect time to load up on shares.

Image source: Nvidia.

Nvidia's valuation has reached must-buy levels

When valuing a fast-growing company like Nvidia, the forward price-to-earnings (P/E) ratio is often used over the trailing one because it gives investors an idea of where it's heading rather than where it has been. Still, regardless of which ratio you use, Nvidia's stock looks quite attractive.

NVDA PE Ratio data by YCharts

Nvidia's trailing P/E ratio of 31.7 is the lowest it has been during the artificial intelligence trend, which began in 2023. It's also close to several of its big tech peers. Companies like Apple and Amazon trade for 40.3 and 27.8 times trailing earnings, respectively. Nvidia is growing far faster than either of them, with its year-over-year growth rate clocking in at 85%.

From a forward earnings perspective, 23 times forward earnings is barely more expensive than the S&P 500, which trades at 21.1 times forward earnings. However, with the AI build-out expected to last several more years, this market-average price tag on Nvidia's stock makes it seem like an absolute steal. It's not often you can buy a stock that's trading at essentially the same price tag as the broader market that's expected to grow revenue at a 42% growth rate the following year.

This means that none of next year's expected success is priced into Nvidia's stock, and it could be primed for major upside in the second half of 2026. So, if you've been holding onto Nvidia shares in anticipation of incredible returns, my advice is to hold on just a little longer, as they could be on the way.

We're starting to hear more reports from AI hyperscalers of increased spending in 2027, and Nvidia itself has already forecast $1 trillion or more in data center capital expenditures from them. That would indicate substantial growth, making Nvidia a must-buy now, as none of that growth has been priced into Nvidia's stock.

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