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Is Nvidia Undervalued? Analyst Claims Stock is Cheaper Than Competitors

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  Published in Stocks and Investing on Monday, December 29th 2025 at 19:19 GMT by 24/7 Wall St.

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Is Nvidia Undervalued? A Look at its Stock Compared to Competitors and Future Prospects

Nvidia (NVDA) has been the story in the stock market for quite some time, fueled by explosive growth in artificial intelligence (AI). However, a recent analysis published on MSN Money suggests that despite this impressive run, Nvidia’s stock might actually be cheaper than those of its competitors, Intel (INTC) and Advanced Micro Devices (AMD), when considering future earnings potential. The article, penned by analyst Josh Younger of Truist Securities, argues that the market is overlooking Nvidia's long-term dominance in a rapidly expanding AI landscape.

The Current Valuation Disconnect

Younger’s core argument revolves around price-to-earnings (P/E) ratios and projected earnings growth. While Nvidia’s stock has seen significant appreciation – making it appear expensive on the surface – its P/E ratio, when adjusted for anticipated future earnings, is surprisingly lower than both Intel's and AMD's. This isn't a simple matter of comparing current P/Es; Younger emphasizes using "next year's EPS" (Earnings Per Share) to project forward.

Currently, Nvidia trades at roughly 30 times next year’s estimated earnings. Intel sits around 12x, and AMD is closer to 25x. On the face of it, this would suggest Nvidia is significantly overvalued. However, Younger contends that these projections are too conservative for Nvidia, particularly given its leading position in AI hardware. He believes analysts are underestimating Nvidia’s ability to maintain and expand its market share as AI adoption accelerates across various industries.

Why Nvidia's Position Matters: The AI Gold Rush

The driving force behind Nvidia’s success is its dominance in the graphics processing unit (GPU) market, particularly for applications requiring massive parallel computing power – precisely what’s needed for training and deploying AI models. While AMD has made inroads with its own GPUs, and Intel is aggressively pursuing the AI chip space with its Gaudi line of accelerators, Nvidia currently holds a substantial lead. The article highlights that Nvidia's data center revenue, largely driven by AI-related sales, now constitutes over 50% of their total revenue – a testament to this dominance.

Younger points out that Nvidia’s GPUs are the "picks and shovels" of the AI gold rush. Just as those who supplied tools to miners during the California Gold Rush often profited more than the miners themselves, Nvidia is positioned to benefit from the widespread adoption of AI regardless of which specific AI models or applications ultimately prevail. This “platform” advantage – offering a comprehensive suite of hardware and software solutions for AI development – provides a significant moat against competition.

Intel and AMD: Challenges and Opportunities

The analysis doesn't dismiss Intel and AMD entirely. Intel, in particular, is undergoing a massive turnaround effort under CEO Pat Gelsinger, aiming to regain its manufacturing leadership and compete more effectively in the data center market. Their Gaudi AI accelerators are seen as a potential challenger to Nvidia’s dominance, but they face hurdles including catching up on software optimization and building a robust ecosystem. Intel's recent earnings reports have shown some progress, but also highlighted ongoing challenges with profitability and execution.

AMD has been steadily improving its GPU offerings and gaining market share in certain segments. However, Younger argues that AMD is still reliant on the broader PC market for a significant portion of its revenue, making it more vulnerable to cyclical downturns than Nvidia, which is increasingly insulated by the AI boom. Furthermore, AMD's margins are generally lower than Nvidia’s, reflecting higher manufacturing costs and increased competition.

Looking Ahead to 2026: A Bullish Outlook for Nvidia

Younger’s projection extends to 2026, where he anticipates Nvidia will continue to outperform expectations. He believes that the current market skepticism surrounding AI's long-term impact is unwarranted, and that demand for Nvidia’s chips will remain robust. He forecasts continued growth in areas like generative AI (think ChatGPT), autonomous vehicles, robotics, and scientific computing – all of which rely heavily on powerful GPUs.

The article acknowledges potential risks. These include increased competition from Intel and AMD, geopolitical tensions impacting supply chains, and a slowdown in overall economic growth that could dampen demand for technology products. However, Younger believes these risks are already factored into Nvidia’s stock price and that the company's strong fundamentals will allow it to weather any storms.

Conclusion: A Contrarian View?

The Truist Securities analysis presents a contrarian view on Nvidia’s valuation. While acknowledging the high price tag, Younger argues that the market is underappreciating Nvidia’s long-term growth potential and its unique position in the AI ecosystem. He suggests that investors who are willing to look beyond short-term fluctuations may find Nvidia's stock to be an attractive investment opportunity, particularly if they believe in the continued expansion of AI across various industries. The key takeaway is that while Nvidia’s price might seem high now, its future earnings potential could justify – and even surpass – current market expectations. Ultimately, Younger believes Nvidia remains a compelling long-term buy, despite the recent volatility in the stock market.

Disclaimer: This article summarizes information from the provided URL and does not constitute financial advice. Investors should conduct their own research and consult with a qualified professional before making any investment decisions.