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Nvidia stock performance has lagged the market over the past three months.
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The company’s revenue and profit growth remains very strong.
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The valuation is reasonable, especially if spending on artificial intelligence (AI) increases more than expected over the next year.
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10 stocks we like more than Nvidia ›
Some stocks are market favorites. No matter what happens to them (a bad earnings report, a competitor introducing a competing product), their stock seems to keep rising.
Other stocks can’t seem to catch a break: They regularly post outstanding earnings and improve their financial metrics, only for the stock price to stubbornly refuse to budge.
The worst of both worlds (at least, for shareholders) is when a former market favorite falls from grace and becomes a market failure. But at least when that happens, it can be a great opportunity for new investors. And it seems that’s what’s happening to NVIDIA (NASDAQ: NVDA) right now.
Here’s why Wall Street could be underestimating this leader in artificial intelligence (AI) in 2026.
It may seem crazy to say that Nvidia is “underrated” by the market. After all, it is the largest company in the world, with a market capitalization of $4.5 trillion. Its shares have increased 1,270% in the last five years alone.
But things haven’t been so rosy lately. Over the past three months, Nvidia stock has lagged the market. While the S&P 500 (SNPINDEX: ^GSPC) has risen more than 3%, Nvidia shares have fallen more than 2%. It may not seem like much, but a return of less than 5% is shocking for a company that once seemingly could do no wrong in the eyes of Wall Street.
And it doesn’t seem like Nvidia has done something bad. Its most recent quarterly results, released in November, were incredibly good. Revenue hit a record $57 billion, up 62% year over year. Net income also hit a record $31.9 billion. And Nvidia expected fourth-quarter revenue of $65 billion, which would be a 65% year-over-year increase.
Still, concerns remain about an “AI bubble” and potential competition from AlphabetTPU processors seem to have made up for these impressive results. So is Wall Street underestimating Nvidia in 2026?
Nvidia is huge, it’s true. But it still seems reasonably valued.
The company’s price-to-earnings (P/E) ratio currently sits at just 46. That’s near its five-year low of 32, and well below its five-year average of 76. Its forward P/E ratio, which uses expected future earnings, sits at just 39.6. But even that may not tell the whole story.