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Nvidia's stock is trading at 25 times this year's earnings estimate.
Wall Street is worried about a slowdown in AI infrastructure spending and increasing competition in the AI chip market.
Nvidia continues to sell every chip it can supply.
Nvidia (NASDAQ: NVDA) has been the gift that keeps on giving for investors. The stock's price tripled in 2023 and doubled in 2024, and added another market-beating 40% gain in 2025.
Despite that impressive bull run, the stock enters 2026 trading at just 25 times this year's consensus earnings estimate, and 46 times trailing earnings. While there are risks to watch, this valuation also sets up the prospect of another year of substantial gains for shareholders.
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Image source: Getty Images.
There are risks for the company that are holding Nvidia's stock valuation down. Wall Street is pricing in the potential for a slowdown in spending on AI infrastructure, while also accounting for the increasing competition in the AI chip market.
Still, leading cloud service providers continue to see demand for compute capacity outpace supply, which is good news for Nvidia. Nvidia's cloud customers are buying every graphics processing unit (GPU) the company can supply.
The new year could be the breakout year for agentic AI, which can plan and complete tasks on behalf of the user. These advanced models require up to 1,000 times more computations than a chatbot. This could drive more demand for Nvidia's NVLink 72 rack system, which is ideal for powering AI agents.
Analysts forecast Nvidia's revenue to increase by 50% this year, reaching approximately $319 billion, with earnings per share expected to surge 61% to $7.57, according to Yahoo! Finance. Assuming the stock is still trading at the same trailing price-to-earnings multiple of 46, its share price could climb to over $300 by the end of 2026. This represents upside of over 50% from the current $188 share price.
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
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