Shares of Nvidia (NVDA) climbed to another record high on Thursday, extending a powerful rally fueled by optimism around artificial intelligence demand, easing restrictions on chip sales to China, and expectations of another blockbuster earnings report later this month.
The stock rose by 2.6% at the market open to cross the $231 mark after closing at an all-time high of $227.16 on Wednesday.
The latest gains came after a Reuters report said the United States had cleared roughly 10 Chinese companies to purchase Nvidia’s H200 AI chips, currently the company’s second-most powerful processor available for China.
The rally has pushed Nvidia deeper into the center of the global AI boom, even as investors increasingly pour money into other semiconductor and AI infrastructure names.
Despite the stock’s massive run, analysts argue Nvidia’s valuation remains relatively attractive compared with both its historical averages and broader semiconductor peers.
For investors considering buying the stock ahead of Nvidia’s earnings report scheduled for May 20, here is why you are not late:
Nvidia nears record profits; analysts say shares undervalued
According to a report by Barron’s, Nvidia is on track to generate more than $190 billion in earnings during calendar year 2026.
If achieved, that would represent the largest annual profit ever recorded by a corporation, surpassing the roughly $160 billion earned by Saudi Aramco in 2022.
Analysts say Nvidia’s earnings trajectory reflects its dominant position in the AI infrastructure market, particularly in graphics processing units, or GPUs, which remain the backbone of large-scale AI systems.
“Shares appear undervalued to us,” wrote Brian Colello, senior equity analyst at Morningstar.
“It appears that investors have gravitated away from Nvidia as an AI investment and toward a host of other AI ‘picks and shovels’ plays in memory and optical semis. We still see upside in Nvidia’s shares as long as it remains on pace to hit its near and medium-term revenue targets.”
Morningstar currently maintains a fair value estimate of $260 on Nvidia shares and rates the company as having a wide economic moat.
“With its 3-star rating, we believe Nvidia’s stock is moderately undervalued compared with our long-term fair value estimate of USD 260,” the firm said.
The research group noted that Nvidia’s future valuation will continue to depend heavily on the outlook for its data center and AI GPU businesses.
UBS Group on Thursday also raised its price target on NVIDIA to $275 from $245 while maintaining a “buy” rating on the AI chipmaker, according to MarketScreener.
The revised target implies a potential upside of about 21.8% from the stock’s previous closing price.
Why is valuation still attractive?
Despite Nvidia’s enormous market capitalization and sharp gains over recent years, analysts say the stock is trading below levels typically associated with a fast-growing semiconductor leader.
Nvidia currently trades at roughly 24 times expected earnings over the next 12 months, representing about a 25% discount to its historical valuation levels.
The stock also trades at a slight discount to the PHLX Semiconductor Index, which includes companies such as Advanced Micro Devices, Micron Technology, Taiwan Semiconductor Manufacturing Company, and Intel.
Historically, Nvidia has typically traded at a premium of around 40% to the broader semiconductor index because of its stronger growth profile.
Analysts noted that Nvidia has lagged the semiconductor index by more than 70 percentage points since the start of 2025 as investors shifted toward other AI-related opportunities, including memory chips, central processing units, and custom accelerator chips.
That rotation has created what some analysts see as a rare opportunity to buy Nvidia shares at a comparatively cheaper valuation.
Wall Street’s average analyst price target currently stands at roughly $270, implying about 20% upside from recent levels.
Some analysts believe those estimates remain conservative.
According to Barron’s, Nvidia shares could approach $290 if they merely traded in line with the average valuation multiple of other semiconductor companies.
A return to Nvidia’s historical premium relative to the sector could justify a stock price closer to $390.
Analysts added that a move toward $300 over the next 12 months appears achievable if AI demand trends remain strong.
AI demand remains robust
Supporters of the stock point to continued signs of explosive demand across the broader AI ecosystem.
“For now, these prospects are distant,” Barron’s said in a report while referring to fears that Nvidia could eventually lose market share to competing chip technologies.
Industry data continues to suggest that demand for AI infrastructure is strengthening rather than slowing.
Vertiv Holdings recently reported a 252% increase in fourth-quarter 2025 orders as AI data center spending accelerated.
The company stopped disclosing detailed order figures because order backlogs had extended so far into the future.
Meanwhile, Zebra Technologies said memory chips could remain in short supply through 2027.
GE Vernova has also reported AI-related power generation demand stretching years into the future.
Nvidia’s GPUs continue to dominate AI workloads because they can process many tasks simultaneously rather than sequentially like traditional CPUs.
Although companies such as Alphabet and SpaceX are developing specialized accelerator chips for specific AI applications, analysts say Nvidia retains a major advantage because of its broad software ecosystem and versatility.
Risks still linger
Even as optimism grows, investors remain wary of risks tied to the AI boom.
Searches for the phrase “AI bubble” on Google have surged roughly 400% over the past year, reflecting concerns that valuations across the sector may have become overheated.
Nvidia also faces extraordinarily high expectations heading into its May 20 earnings release.
Analysts expect sales growth of nearly 80%, leaving little room for disappointment.
Over the past three quarters, Nvidia has exceeded analyst sales estimates by an average of around 3%, though investors initially sold the stock after several of those earnings reports before shares later recovered.
There are also ongoing concerns that hyperscalers could increasingly rely on their own custom-built chips or alternative AI processors over time.
Still, analysts say those threats remain limited in the near term as global demand for AI computing power continues to expand rapidly and Nvidia’s chips remain central to building advanced AI systems.
