Nvidia (NVDA) stock rose to another all-time high on Thursday, continuing a strong rally driven by optimism around artificial intelligence demand, easing of restrictions on chip sales to China, and expectations for another big earnings report later this month.
After closing at an all-time high of $227.16 on Wednesday, the stock rose 2.6% at the market open, topping the $231 mark.
The recent rally came after it was reported that the United States had authorized about 10 Chinese companies to buy Nvidia’s H200 AI chip, the company’s second most powerful processor currently sold in China.
The rally thrust Nvidia deeper into the center of the global AI boom, even as investors increasingly pour money into other semiconductor and AI infrastructure names.
Analysts argue that despite the stock’s significant increase, Nvidia’s valuation remains relatively attractive compared to historical averages and its broader semiconductor peers.
For investors looking to buy stock ahead of Nvidia’s earnings report scheduled for May 20th, here’s why you shouldn’t delay.
Nvidia is nearing record profits. Analysts say the stock is undervalued
According to a report from Barron’s, NVIDIA is expected to generate more than $190 billion in profits during the 2026 calendar year.
If achieved, this would be the largest annual profit ever recorded by a company, surpassing the roughly $160 billion that Saudi Aramco earned in 2022.
Analysts say NVIDIA’s revenue trajectory reflects the company’s dominant position in the AI infrastructure market, particularly in graphics processing units (GPUs), which are the backbone of large-scale AI systems.
“The stock appears to be undervalued to us,” said Brian Colello, senior equity analyst at Morningstar.
“Investors appear to be gravitating away from Nvidia as an AI investment and toward other AI ‘pick and drop’ activities in memory and opto-semiconductors. We think Nvidia’s stock still has upside potential as long as it maintains its pace of achieving near-to-medium-term revenue targets.”
Morningstar currently maintains a fair value estimate for Nvidia stock at $260, calling the company’s economic moat wide.
“With our 3-star rating, we believe NVIDIA’s stock is moderately undervalued relative to our long-term fair value estimate of $260,” the company said.
The research group noted that Nvidia’s future valuation will continue to depend heavily on the outlook for its data center and AI GPU businesses.
UBS Group on Thursday raised its price target on NVIDIA from $245 to $275, while maintaining its “buy” rating on the AI chip maker, according to MarketScreener.
The revised target suggests the stock could rise approximately 21.8% from its previous closing price.
Why is valuation still attractive?
Despite Nvidia’s huge market capitalization and rapid growth in recent years, analysts say the stock is trading below levels typical of the fast-growing semiconductor leader.
Nvidia currently trades at about 24 times forward 12-month earnings, which is about a 25% discount to historical valuation levels.
The stock trades at a slight discount to the PHLX Semiconductor Index, which includes companies such as Advanced Micro Devices, Micron Technology, Taiwan Semiconductor Manufacturing Company and Intel.
Historically, Nvidia has typically traded at an approximately 40% premium to the broader semiconductor index due to its strong growth profile.
Analysts said Nvidia has lagged semiconductor indexes by more than 70 percent since the start of 2025 as investors have shifted to other AI-related opportunities such as memory chips, central processing units and custom accelerator chips.
Some analysts believe this rotation creates a unique opportunity to buy Nvidia stock at a relatively cheap valuation.
The average price target among Wall Street analysts is currently around $270, suggesting an upside of about 20% from recent levels.
Some analysts believe these forecasts remain conservative.
According to Barron’s, Nvidia stock could approach $290 if it simply trades in line with the average valuation multiples of other semiconductor companies.
A return to Nvidia’s historical premium to the sector could justify a share price closer to $390.
Analysts added that a move towards $300 over the next 12 months is achievable if AI demand trends remain strong.
AI demand remains strong
Supporters of the stock point to continued signs of explosive demand across the broader AI ecosystem.
“For now, these prospects are remote,” Barron’s said in a report, citing concerns that Nvidia could eventually lose market share to competing chip technologies.
Industry data continues to suggest that demand for AI infrastructure is strengthening rather than slowing.
Vertiv Holdings recently reported a 252% increase in orders for Q4 2025 due to accelerated spending on AI data centers.
The company has stopped disclosing detailed order amounts because the order backlog has extended far into the future.
Meanwhile, Zebra Technologies said memory chips could remain in short supply until 2027.
GE Vernova also reports that AI-related power generation demand will continue for several years.
Nvidia’s GPUs continue to dominate AI workloads because they can process many tasks simultaneously, rather than sequentially like traditional CPUs.
While companies like Alphabet and SpaceX are developing specialized accelerator chips for specific AI applications, analysts say Nvidia maintains a big advantage thanks to its broad software ecosystem and versatility.
risks still remain
Despite growing optimism, investors remain wary of the risks associated with the AI boom.
Searches for the phrase “AI bubble” on Google have increased by about 400% over the past year, reflecting concerns that valuations across the sector may be overheated.
Nvidia is also facing extremely high expectations heading into its May 20th earnings release.
Analysts expect sales to grow nearly 80%, leaving little room for disappointment.
Over the past three quarters, NVIDIA’s revenue has exceeded analysts’ expectations by an average of about 3%, but investors initially sold their shares after several of these earnings reports, and the stock price has since recovered.
There are also ongoing concerns that hyperscalers may become more reliant on their own custom-built chips and alternative AI processors over time.
Still, analysts say such threats will remain limited in the short term, as global demand for AI computing power continues to grow rapidly and NVIDIA chips remain at the heart of building advanced AI systems.
