Nvidia Stock Rallied (Again) Today and Is Near a New All-Time High. Is the Stock Still a Buy?

Nvidia (NASDAQ: NVDA) stock has started off October with a bang. After suffering through an epic meltdown over the summer, things are beginning to look up. A lofty valuation and concerns about the current state of artificial intelligence (AI) adoption gave investors pause, sending the AI chip specialist skidding as much as 27%. However, Nvidia regained its footing early last month and has rallied more than 29% in the roughly four weeks since.

The stock added to its tally today, climbing as much as 4.5%. By the time the market closed, the stock was still up 4.1%.

After a rally of that magnitude, investors are wondering if the stock is still a buy.

Bullish signs abound

Nvidia stock has been on a blistering rally since the start of last year, with the stock gaining more than 800%. The advent of AI caused a mad dash for the company's graphics processing units (GPUs), which have the raw number-crunching capability needed to process AI. This insatiable demand showed in Nvidia's results, as the company generated five successive quarters of triple-digit, year-over-year sales and profit growth. However, when the company forecasted revenue growth of "just" 80%, fair-weather investors thought the sky was falling and headed for the hills. That may have been a costly blunder.

In an interview last week, CEO Jensen Huang said the demand for Nvidia's next-generation Blackwell AI architecture is "insane." He went on to say, "Everybody wants to have the most, and everybody wants to be first." This comes in stark contrast to recent fears that demand for AI had peaked.

Wall Street continues to bet on Nvidia in a big way. Cantor Fitzgerald analyst C.J. Muse is representative of the mood among analysts, noting Nvidia has "the best upside consensus" among all the stocks he covers, saying it's "far and away our Top Pick."

The forest for the trees

One of the biggest sticking points for investors was Nvidia's lofty valuation, and at 62 times earnings, that concern is understandable. However, for Nvidia's 2026 fiscal year (which begins in January), Wall Street is predicting earnings per share of $4.02. At its current share price of about $133, that works out to about 33 times forward earnings, which is only a slight premium to the multiple of 30 for the S&P 500.

That's an attractive price to pay for a company with so many ways to win.

Should you invest $1,000 in Nvidia right now?

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Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.