Think You Missed Out on Nvidia’s Stock Rise? Think Again. | The Motley Fool

Nvidia (NVDA -0.74%) has been one of the premier stocks to own over the past few years. It has risen by about 1,500% since the start of 2023, which may have many investors who didn’t buy shares earlier feeling like they’ve missed the boat. While the company is too large to be able to deliver those types of returns again, I think it’s still worth buying right now.

The reason? Nvidia expects huge growth next year, and none of it is priced into the stock.

Nvidia is undervalued when next year’s projections are used

Nvidia is actually a pretty cheap stock by most valuation measures. It trades at 30 times trailing earnings, which is right where I’d expect a big tech stock to trade.However, that metric doesn’t take future earnings growth into account, and that’s where the opportunity is.

Nvidia has informed investors that it expects 70% revenue growth in its next fiscal year. If you’ve owned Nvidia over the past few years, it has outperformed expectations nearly every quarter, so this guidance should be taken with a grain of salt, as the actual growth rate could be meaningfully higher. Still, even if it is 70%, that leaves plenty of room for the stock to climb.

If we measure Nvidia’s stock relative to next year’s projected earnings, its valuation tumbles to about 15 times earnings.

NVDA PE Ratio (Forward 1y) data by YCharts.

Why is that significant? Well, we’ve already established that 30 times trailing earnings is a fair price for a big tech stock like…