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NVIDIA stock price has underperformed the market this year as it has fallen from the all-time high of $112 to $117 today. Still, this weakness may be short-lived, with key fundamentals and technicals pointing to an explosive surge in the coming months.
NVIDIA Stock Price Has Formed a Large Bullish Flag Pattern
One main reason the NVDA stock price may surge this year is that the ongoing weakness is part of a large bullish flag pattern, which often leads to further gains.
The three-day chart shows that the flagpole of this pattern started in April last year when it bottomed at $86 following Donald Trump’s tariffs announcement.
It completed the flagpole section in October last year when it jumped to a record high. Since then, the stock has made a descending channel, which is part of the flag section.
Additionally, the stock has settled above the 100-day Exponential Moving Average (EMA), which has provided it with substantial support.
Therefore, it is just a matter of time before the stock rebounds substantially. If this happens, the first main resistance level to watch will be the psychological price at $200 followed by the all-time high of $212. A surge above that price will lead to more gains over time.
NVIDIA Share Price Has Become a Bargain
There are two broad types of companies in Wall Street: value and growth. Value companies are blue-chip firms that grow slowly and are often highly undervalued. Growth companies are those that experience double or triple-digit revenue growth. In most cases, these companies often attract a premium valuation.
NVIDIA, one of the fastest-growing American companies, is now valued as a value company. For example, the company has a forward PE ratio of 21, which is on par with that of the S&P 500 Index.
NVIDIA’s valuation is lower than Chevron’s, an energy company whose revenue dropped 5.4%. Its valuation is also smaller than Tesla’s, an electric vehicle company with decelerating revenue growth and substantial competition.
NVIDIA is also a bargain based on the rule-of-40 calculation, which adds a company’s revenue growth and margins. By adding its forward revenue growth of 55% and its net margin of 55%, we see its rule-of-40 multiple being 110%.
NVIDIA’s Growth Momentum is Continuing
Meanwhile, the company’s growth is still accelerating as companies boost their AI investments.
A good example of this is what analysts expect to happen this year. Data shows that analysts expect NVIDIA’s revenue will be $369 billion this year, up by 71% YoY.
In a recent statement at the GTC Conference, Jensen Huang said the company will achieve over $1 trillion in sales by 2028. It has already inked major deals with companies like Amazon and Microsoft to make this possible.
Most importantly, NVIDIA’s growth estimates don’t include future sales to China, a country where demand for AI is soaring.
Analysts are Bullish on the NVDA Stock
Despite the ongoing NVIDIA stock crash, analysts are highly bullish on the company, with the average 2026 target at $275, about 55% above the current level.
Some of the most bullish analysts are from companies like Benchmark, Cantor Fitzgerald, Raymond James, Trust, and UBS. In a recent note, Raymond James raised its target price on the stock to $323 from $291.
NVIDIA Investments Will Pay Off Over Time
Meanwhile, NVIDIA has spent billions of dollars in the past few months investing in private and public companies. It has invested in companies like Intel, Marvell, CoreWeave, and Nebius.
The company has also invested in many private companies it believes will do well over time. As a result, it has become a major venture capital company.
While not all its investments will pay off, some of them will do, which will lead to more shareholder returns. A good example of this is Intel whose stock has soared since its investment last year.
