Nvidia (NASDAQ: NVDA) has been a market-average stock this year, rising about 15.5% versus 13% for the S&P 500. Investors are used to huge outperformance, and this year hasn’t delivered that. However, I believe it could be coming in November.
Nvidia reports Q3 earnings in November, likely around Nov. 18, if past earnings dates are indicative of future ones. I think news from this event could kick-start a major rally, making Nvidia a top stock to buy in the first half of November.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
The stock is priced to soar
Nvidia’s low performance this year hasn’t come from a lack of results. In the second quarter, revenue rose 106% year over year to $96.2 billion. That’s simply incredible, especially considering Nvidia’s size. Wall Street analysts expect another strong Q3, with revenue estimated to rise about 91%. For the fourth quarter, that figure is 83%. Clearly, impressive results are expected from Nvidia, yet the stock has gone nowhere.
To make matters even more head-scratching, Nvidia has already told investors that it expects 70% revenue growth in 2027. Normally, companies don’t make projections like that six months before they report Q4 earnings, but Nvidia chose to do it in Q2. Why? It has high visibility into revenue, as most of its 2027 business is likely already locked in.
However, none of this sentiment has made its way into the stock yet, as its stock is priced fairly cheaply considering its growth. Currently, Nvidia trades for 27 times earnings.
NVDA P/E Ratio data by YCharts. P/E = price-to-earnings.
While that price by itself may not raise red flags, what it tells investors is that none of its future expected growth has been priced into it. Several big tech stocks have hovered around this level for a long time, but none of them had the expected growth rates of Nvidia. As a result, Nvidia’s stock could be primed to soar because the future looks bright.
What kind of returns can investors expect?
If we use next year’s earnings projections, which have historically been undershot by Wall Street analysts, Nvidia trades for just 13.5 times next year’s earnings.
NVDA P/E Ratio (Forward 1y) data by YCharts.
So, what does that mean for the stock? Right now, only two quarters’ worth of results are available for Nvidia. If Nvidia hits Wall Street’s estimates over the next year and a half, its earnings will double. Should Nvidia’s valuation maintain its 27 times earnings level throughout the next year and a half, that means the stock would have to double from today’s level.