NVDA Stock Is Not "Fully Pricing in" Its Positive Attributes, Analyst Says

Nvidia's (NVDA) shares are not fully pricing in all of its upbeat catalysts, and it's "certainly a buy," Keybanc analyst John Vinh told Yahoo Finance recently.

Moreover, it's "a bit premature" to be concerned about Nvidia's competition from custom AI chip makers, Vinh believes.

NVDA's Attractive Valuation

NVDA stock is failing to price in "everything," Vinh said. And with the shares changing hands at less than 20 times analysts' average estimates, the name is trading for far less than its historical price-earnings ratios of 35 to 40 times, Vinh noted.

"Premature" to Worry About Competition From Custom Chips

Since we're in the "very early stages of generative AI," neither NVDA nor customer AI chip makers are going to capture the entire AI  chip market, Vinh noted.

Further, NVDA "is very far ahead of the competition," while there is "limited" validation of the custom chips made by Broadcom (AVGO), Vinh noted. AVGO is seen as a leader of the custom chip space.

But aside from Alphabet (GOOG), which uses AVGO's custom chip,  there is "limited proof" that AVGO's processors can successfully compete with those of NVDA, the analyst reported.

Export Controls Are "A Little Bit of an Overhang" on NVDA Stock

Export controls on NVDA's chips are "a concern and a little bit of an overhang on" NVDA stock, the analyst stated. "We'll have to see how it plays out," he added.

While we acknowledge the potential of NVDA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey