Analyst Explains Why Nvidia (NVDA) Valuation Isn't 'As Streched as Everyone Would Argue'

We recently published Top 10 Trending Stocks to Watch Ahead of Nvidia Earnings. NVIDIA Corporation (NASDAQ:NVDA) is one of the top trending stocks to watch ahead of Nvidia earnings.

Nancy Tengler from Laffer Tengler said in a program last month that Nvidia's valuation is not too high and recommended investors to buy the stock on the dip.

“I guess I would just say that the valuation is not as stretched as everyone would argue. I don’t know that you buy it here. We were adding during the April tariff tantrum. We picked some off at $108 a share. We added to the position while we’ve been trimming Broadcom, which has actually outperformed NVIDIA Corp (NASDAQ:NVDA) over the last year. But if you look at fiscal year earnings growth, 2026 is supposed to be 45%, then 33% in 2027, 14% in 2028, and it’s currently trading at a forward PE of 40. So you’re actually paying less than one times on a price-earnings-to-growth basis. So unless you think the growth in this company is done, I don’t think you sell the stock here. I don’t think you necessarily buy more, but on dips you step in and add to the holdings.”

Investors are gearing up for Nvidia’s latest results on Wednesday. In its last reported quarter, Nvidia’s data center computer revenue rose 76% year over year, driven by Blackwell GB200. The company is finding new catalysts for growth. Saudi Arabia’s Humain plans to buy more than 200,000 AI GPUs from Nvidia, potentially generating $15 billion in sales. The UAE reportedly has an agreement for up to 500,000 GPUs. Even without China’s involvement for now, Nvidia said nearly 100 AI factories are under construction. These factories have hyperscalers deploying 1,000 GB200 NVL72 racks weekly, each with 72,000 Blackwell GPUs.

Sands Capital Technology Innovators Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA) is the market-leading provider of AI technology based on revenue. Its most recent results eased concerns about AI demand and the impact of export restrictions on China. Although the H20 ban created a $10.5 billion revenue headwind in the first half of 2025, demand remains strong. Excluding China, datacenter revenue grew 64 percent year-over-year and is expected to accelerate to 70 percent next quarter. Management also guided for gross margins to rise to the mid-70 percent range from 72 percent. Rack yield concerns were addressed, with major hyperscalers now deploying nearly 72,000 Blackwell GPUs per week. NVIDIA ended the quarter as the strategy’s largest position and remains a high-conviction business at Sands Capital.”

While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.