Nvidia (NVDA) reported another monster quarter last night… and the market did what the market does: it second-guessed it.
The stock opened sharply higher this morning as investors digested the numbers - revenue soaring, margins expanding, and guidance that once again outpaced even the most bullish expectations. But as the session went on, traders began to “sell the news,” and Nvidia slowly gave back those early gains.
NVIDIA
That’s normal. Stocks that have run as far and as fast as Nvidia often face this kind of knee-jerk volatility after earnings, especially when sentiment is skittish and people are looking for reasons to take profits. But if you zoom out - beyond the intraday noise - you see something much more important unfolding.
This isn’t 1999. This isn’t a bubble. This is what real, fundamental, cash-flow-backed growth looks like.
The Valuation Myth: Nvidia Is Not Overpriced
We need to talk about valuation because the headlines this morning were full of the same lazy takes:
“Nvidia is too expensive.”
“This is the next tech bubble.”
Let’s look at the actual numbers.
Based on the next fiscal year earnings – ending January 2027, Nvidia with a forward price-to-earnings ratio (P/E ratio) of 25. For a company growing earnings in the mid 50% range this year and next and dominating one of the fastest-growing markets in history, that valuation is not just reasonable - it’s cheap relative to its growth.
One way to measure the valuation is to look at the PEG ratio - price-to-earnings relative to growth.
Nvidia’s PEG ratio sits near around 0.5 based on current estimates. For context:
A PEG ratio below 1.0 is considered undervalued (cheap).
The average PEG ratio during the dot-com bubble was above 2.5 for companies with far less revenue, no profits, and questionable business models.
Many high-flyers of 1999 traded without a PEG ratio because they didn’t even have earnings.
Nvidia is a different beast entirely:
It generates massive, growing free cash flow.
It has near-monopoly-like demand for its AI accelerators.
It continues to deliver quarter after quarter with precision.
And it’s leading what will be a multi-trillion-dollar AI infrastructure boom.
If anything, the stock is undervalued relative to the scale of the AI transformation it is driving.
Short-Term Volatility vs. Long-Term Reality
Could Nvidia pull back? Absolutely. Big winners always do.
But a red candle after earnings does not rewrite the long-term story.
Here’s the real takeaway:
Nvidia’s fundamentals are still strong, its valuation is still reasonable, and the AI megatrend is still in its early innings.
Smart investors don’t obsess over intraday fluctuations. They focus on the companies powering generational shifts - and Nvidia continues to sit at the center of one of the biggest secular booms we’ll ever see.
Volatility is a gift. Pullbacks are opportunities.
Heres to your future,
Matt McCall
Founder, NXT Wave Research
