Nvidia is a ‘best in breed’ stock on sale. Here’s why I’m buying
Company snapshot with chart I started buying Nvidia back in July when the stock was around $200. I liked it a lot then. I like it even more today. It’s just the kind of setup I look for: a best-in-breed company on sale. The Santa Clara-based chipmaker is at the center of the AI boom. Its graphics processing units, or GPUs, provide the computing power behind many of the world’s most advanced AI systems, while its software and computing platforms help customers build and run AI applications. Key points Nvidia has dramatically underperformed the broader semiconductor sector despite its dominant position in the industry. The stock is trading at its cheapest valuation in at least a decade. Nvidia’s business is still growing at an extraordinary rate. Nvidia shares are up this year, but they have badly lagged the rest of the semiconductor sector. I see this as an opportunity. The business continues to grow at an extraordinary rate. And on Sept. 28, Nvidia added $150 billion to its share repurchase authorization, bringing the remaining total to $235 billion, which it expects to execute through fiscal 2028. It’s the largest increase to its buyback authorization in company history. Why I’m buying A best-in-breed stock is on sale Nvidia has underperformed the Philadelphia Semiconductor Index by 55% year to date and 75% over the past year. The stock’s performance looks especially disconnected from the strength of the underlying business. Nvidia remains the dominant player in server GPUs, with roughly 97% market share. To me, this is a chance to buy the leader while the stock is underperforming its peers. The valuation is compelling Nvidia’s underperformance has also left the stock trading at a much cheaper valuation than it has historically. The stock trades at about 16.7 times forward earnings, compared with an average of roughly 35 times earnings over both the past five and 10 years. The company also increased its share repurchase authorization by a record $150 billion this week, bringing the remaining total to $235 billion through fiscal 2028. That’s roughly 4% of Nvidia’s market value, similar in scale to Apple’s then-record $110 billion buyback authorization in 2024. And I think the valuation could become even more compelling as earnings grow. I see Nvidia generating roughly $22 per share in earnings in fiscal 2028. At the current share price, that would put the stock at only about 10.7 times those earnings. For a company with Nvidia’s growth and dominant market position, that’s an attractive valuation. NVDA YTD mountain Nvidia, YTD Still growing at an extraordinary rate The stock’s underperformance hasn’t been matched by a slowdown in the business. Nvidia’s revenue jumped 106% from a year earlier in its latest quarter, and management expects roughly 70% revenue growth in fiscal 2028. Nvidia has also said demand is exceeding supply through 2028. Nvidia also has more going for it than its current generation of GPUs. Its proprietary software platform has become an industry standard, while newer computing platforms including Blackwell and Vera Rubin are expanding its capabilities. It’s also moving further into the CPU market. Demand across the industry remains exceptionally strong. Micron reinforced that point Wednesday evening, saying on its earnings call that memory demand continues to exceed available supply as AI infrastructure spending grows. In my view, gross margins have also been derisked at around 72%. Why now? Nvidia shares are near their 52-week high, but the valuation chart tells a different story. At about 16.7 times forward earnings, the stock is trading at its cheapest multiple in at least a decade. The recently expanded share buyback provides another reason to like the setup at these levels. That’s why I still consider Nvidia to be on sale at its current valuation. Bottom line Nvidia remains the dominant player in AI computing, and the business is still growing at an extraordinary rate. Its leadership in GPUs, software and next-generation computing platforms gives it multiple ways to benefit as AI investment expands. I see a company with tremendous earnings power that the stock’s current valuation simply doesn’t reflect. That’s why I’m still buying. Stephanie Link is the Chief Investment Strategist at Hightower Advisors, where her division manages $8.5 billion in assets (as of June 4, 2026). She has 35 years of experience managing money and serves on KKR’s investment council. She earned a B.S. in finance from Boston College. Disclosures: Link owns in Hightower Advisors. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. This content is provided as part of our editorial output for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to buy any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above content might not be suitable for your particular circumstances. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
