For much of the AI boom, Nvidia (NASDAQ: NVDA) has been the stock market darling.
The stock started soaring shortly after the release of ChatGPT in Nov. 2022 as it was primed to benefit from demand for its GPUs, which are used for AI training.
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Since then, the stock has gained more than 1,000%, and Nvidia has become the most valuable company in the world, with a market cap of nearly $5 trillion.
However, in 2026, chip stock investors seemed to have moved on from the industry leader, piling into the new chip sector bottlenecks, including memory chip stocks like Micron and Sandisk, which are experiencing a shortage, and CPU stocks like Intel, AMD, and Arm Holdings, which are expected to benefit from increasing demand for AI inference.
As a result, Nvidia’s performance has been downright pedestrian this year. At nearly the halfway point of 2026, Nvidia stock is up just 4%, compared to an 8% gain in the S&P 500, and a 9% increase in the Nasdaq Composite. The iShares Semiconductor ETF, which tracks the sector, has more than doubled this year due to breakout gains from Intel, Micron, and other stocks, rather than Nvidia.
While Nvidia stock is slumping, down 17% from its peak in May, the business performance remains excellent. Revenue jumped 85% in the first quarter to $81.6 billion, and adjusted net income rose 139% $45.5 billion. Nvidia’s net income is on track to top $200 billion this year, easily making it the most profitable company in the world. To put that number into perspective, only a few dozen companies make that much in annual revenue. $200 billion is similar to the GDP of countries like Ukraine and Qatar.
Based on its trailing adjusted earnings per share of $5.84, the stock now has a price-to-earnings ratio of 33, which is modestly more expensive than the S&P 500, at 26.
Where Nvidia starts to look like a bargain
The trailing valuation isn’t the best way to look at Nvidia. After all, this is a company that just grew revenue by 85% and more than doubled its net income. You have to factor in its growth and its direction.
Below is the consensus EPS forecast for Nvidia for the next three years.
Source: Nasdaq.com
Nvidia reported $4.77 in adjusted EPS last year, so analysts expect EPS to nearly double this year and to more than triple over the next three years.
