Shares of Nvidia rallied (again) today and are near a new all-time high. Is the stock still a buy?

Nvidia (NVDA 4.05%) the stock started October with a bang. After suffering an epic meltdown over the summer, things are looking up. A high valuation and concerns about the current state of artificial intelligence (AI) adoption gave investors pause, sending the AI ​​chip specialist down as much as 27%. However, Nvidia recovered early last month and is up more than 29% in the roughly four weeks since then.

Shares rallied today, climbing as much as 4.5%. By market close, shares were still up 4.1%.

After a rally of this magnitude, investors are wondering if the stock is still a buy.

Optimistic signs abound

Nvidia stock has been on a meteoric rise since the start of last year, with shares gaining more than 800%. The advent of AI has caused a mad race for enterprise graphics processing units (GPUs), which have the raw number-crunching capacity needed to process AI. That voracious demand showed in Nvidia’s results, as the company delivered five consecutive quarters of triple-digit year-over-year sales and profit growth. However, when the company forecast revenue growth of “only” 80%, fair-weather investors thought the sky was falling and headed for the hills. It may have been a costly blunder.

In an interview last week, CEO Jensen Huang said demand for Nvidia’s next-generation Blackwell AI architecture is “insane.” He went on to say, “Everybody wants to have the most and everybody wants to be first.” This comes in stark contrast to recent fears that demand for AI has peaked.

Wall Street continues to bet big on Nvidia. Cantor Fitzgerald analyst CJ Muse is representative of the mood among analysts, noting that Nvidia has the “best growth consensus” of all the stocks he covers, saying it’s “by far our top pick.” .

The forest for the trees

One of the biggest sticking points for investors has been Nvidia’s high valuation, and at 62 times earnings, that concern is understandable. However, for Nvidia’s 2026 fiscal year (which starts in January), Wall Street is predicting earnings per share of $4.02. At the current share price of around $133, this works out to around 33 times forward earnings, which is only a slight premium to the 30 multiple for S&P 500.

This is an attractive price to pay for a company with so many ways to win.