By Dr. James Fox
Publication Date: 2025-12-26 06:21:00
Image source: Getty Images
Over the past five years, Nvidia (NASDAQ:NVDA) stock has gone from a relative unknown for UK investors to one of the most common holdings. It’s the largest listed company in the world and represents 8% of the S&P 500‘s total market capitalisation.
The important question for investors is whether the stock is worth buying for 2026? The stock has pulled back in recent weeks following its earnings report, which was initially very well received. However, the market ebbs and flows, and now it’s ebbing.
For me, and for most investors, the first thing to consider is the valuation. And it’s certainly not expensive. The stock is trading around 23.4 times forward earnings (rolling basis — the next 12 months). That means it’s trading in line with the average for the information technology sector.
Then, we should address the growth-adjusted valuation and the balance sheet. Well, earnings growth averaged over the medium term is forecasted to be around 37%. That gives us a price-to-earnings-to-growth (PEG) ratio of 0.6. That’s a massive discount to the sector average at 1.7.
And the balance sheet? Well that’s rock solid. The business has a net cash position worth around $50bn. It’s so rich it could buy most of the companies on the FTSE 100 in cash.
What’s more, analysts are continuing to push their forecasts for Nvidia’s earnings upwards. This should reflect potential big orders from China that hadn’t…