The Nvidia (NASDAQ:NVDA) share price has almost plateaued over the past six months. There hasn’t been a huge amount of share price growth.
Despite that, the company has continued to deliver very strong earnings growth and very strong forecasts. The innovation cycle is like nothing we’ve seen in recent history. There’s a lot to be excited about.
So, what could happen in 2026?
Nvidia valuation
Valuation is always the starting point for an investment. It should never be “oh, I think this company will benefit from X trend“. Because that trend could already be priced in. The market tries to predict what’s going to happen next, and the likelihood is, someone has already had that idea.
For me, the Nvidia question is whether the market is temporarily undervaluing the stock. And I think it is.
Many people will say, Nvidia looks a little expensive at 39.9 times forward earnings. But remember, Nvidia’s FY2026 comes to an end this month.
-To get a better picture of the forward projections, we need to look at the rolling 12-month forecast or the FY2027 forecast. The rolling 12month forecast tells us it’s trading at 24.8 times earnings, and the FY2027 forecast is 24.3 times earnings.
That’s not a figure I perceive to be particularly expensive when we consider that Nvidia is so critical to the AI revolution. Its chips are integral to most data centres and will be essential for powering the vast majority of robots and self‑driving cars.
Looking much longer term — this is where the forecasts get a bit fluffy — analysts still expect strong earnings growth. This includes 61% in 2027, 28% in 2028, 14% in 2029, and 10% in 2030.
This type of long-term growth is certainly enough to satisfy the valuation multiples we’re looking at. That’s my view at least.
In fact, this is simply how the price-to-earnings-to-growth (PEG) ratio works. It tells us that if the average earnings growth exceeds the forward P/E ratio, then we’re possibly looking at a winner.
A mile a minute
Following Nvidia isn’t easy. There are new updates every few days and new pieces of industry data to take onboard. These announcements have huge implications for companies further down the line too.
For example, CEO Jensen Huang said the other day that its newest chips run at much higher temperatures, meaning they can be cooled with warmer liquid.
I think the thing that impresses me the most is the speed of innovation. The company surprised investors are its CES 2026 event when it said that the next-generation Vera Rubin computer was already in full production.
The overarching risk here is competition. Nvidia’s GPUs are so central today, but it’s possible that it shares the future of AI hardware with another company, maybe AMD or even Alphabet with its TPUs.
Nonetheless, I, and many institutional analysts, are still very optimistic. The average share price target points to a 35% undervaluation. With that in mind, I believe it worth strongly considering.
I think £10,000 invested in Nvidia today could be worth around £13,000 at the end of the year. That’s assuming the exchange rate stays broadly the same.
