Nvidia (NASDAQ:NVDA) might be one of the S&P 500’s top-performing stocks of the last five years. But at today’s prices, it doesn’t exactly look expensive.
While the share price has faltered in 2026, the underlying business continues to storm ahead. So is this the buying opportunity investors like me have been waiting for?
P/E multiples
In the last five years, Nvidia’s shares haven’t traded at a price-to-earnings (P/E) ratio below 30. And most of the time, the multiple has been a lot higher than that.
To say the underlying business has come up with the goods to justify that valuation is an understatement. Revenues are up around 1,000% and the company seems unstoppable.
Investors, though, have always had to think about the risk that something might derail the firm’s progress. Even if it’s just customers running out of cash to keep buying the latest chips.
Right now, though, the share price implies a P/E ratio of around 17 based on expectations for next year’s earnings. And at that level, the equation looks very different.
A forward P/E multiple of 17 is lower than Amazon (23) and Microsoft (21). And I’ve been buying both of those stocks recently on the grounds that I think they look like great value.
I’m sticking by that view, but it’s hard to ignore Nvidia at today’s prices. Until recently, I’ve argued that there’s a lot of future growth priced in, but that argument is difficult to make now.
Risks
Nvidia shares have lost momentum despite the underlying business growing strongly because investors have started to worry about risks. And in fairness, they’re not making these up.
To keep growing, the company has to keep releasing better chips that the likes of Amazon and Microsoft have to buy for their data centres. So far, so good, but maintaining this is hard.
This kind of business model encourages competition. And Nvidia’s major customers are starting to develop their own products that have better power efficiency scores.
The other reason for concern focuses on some of the deals Nvidia has been doing with its customers. The most high-profile of these has been OpenAI.
What was announced in September 2025 as a potential partnership worth up to $100bn is now a $30bn investment. And it’s been confirmed that this was never a binding commitment.
There might well be nothing to worry about in this situation. But the chance of potential deals downsizing by 70% is something investors should probably factor into their thinking.
A screaming buy?
The stock is up over 1,000% in the last five years. But there’s a real sense in which this might be the best time to consider buying Nvidia shares in a long time.
There are risks, but those have always been there. And expectations are starting to become more moderate, which offers investors better value for taking those risks.
Is the stock a better choice for my portfolio than Amazon or Microsoft at today’s prices? I’m not sure – but for the first time in a long time, I’m giving it some serious thought.
