Nvidia (NASDAQ: NVDA) stock has paused for breath recently. Had you invested in the chip designer six months ago, you wouldn’t have seen a material profit yet.
I think it’s only a matter of time until the growth stock enjoys its next move upward, however. So, now could be a good time to get positioned for a potential rally.
The growth story’s still intact
While Nvidia’s share price has gone nowhere over the last six months, the growth story here is still very much intact. This financial year (ending 31 January 2027), for example, analysts see Nvidia’s revenues hitting $366bn – 69% higher than the figure for the last financial year.
Earnings per share are projected to hit $8.26 versus $4.77 last year (+73%). These are incredible growth numbers for a company of Nvidia’s size ($4.5trn).
I’ll point out that these are just projections. And they may not come to fruition.
Yet looking at recent developments here, there’s a lot to be excited about. Right now, this company has a huge amount of momentum.
Major catalysts
For instance, late last year, the company formed a partnership with AI powerhouse Anthropic. It’s Anthropic’s Claude Models that are rapidly disrupting the software space and the white collar work environment.
More recently, the company signed a partnership with cloud computing giant Amazon. This will see Amazon’s AWS unit buy 1m GPUs (along with a host of other AI offerings) by 2027.
We also had Nvidia’s GTC conference recently. Here, CEO Jensen Huang unveiled the company’s new AI platform (Vera Rubin) and said that he expects $1trn in revenue between this and current generation Blackwell chips through 2027.
One other thing worth highlighting is a recent CNBC interview with Huang. Here, he said that the company is winning a ton of customers outside the hyperscalers.
In other words, regular companies are buying Nvidia’s GPUs to power their own AI programmes. These companies now represent 40% of the group’s business, meaning that its customer base is becoming more diversified.
Note that Huang thinks that the market is “missing several things about Nvidia”. He believes that investors are incorrectly assuming that all growth is priced in.
Looking at the valuation, it’s easy to see why this is his view. Currently, the stock is trading on a price-to-earnings (P/E) ratio of just 22.
Time to consider buying?
Of course, we don’t know what’s going to happen with this stock in the near term. Short-term movements in the stock market are very hard to predict.
We could see competitors release new products or do deals that weaken investor sentiment towards Nvidia. Alternatively, we could see a market crash that drags everything down.
Taking a one-to-three-year view, however, I think there’s a good chance that Nvidia will experience another move higher. Analysts seem to agree – the average 12-month price target is about $268 at present (more than 40% above today’s share price).
So, for those who don’t own it, now could be a good time to consider buying. For those that do, now could be a good time to size the position optimally to benefit from a potential move higher.
