A drop in the price of NVIDIA Corporation (NASDAQ:NVDA) stock has one analyst highlighting the valuation metrics of the company compared to other Magnificent Seven peers. Here’s why the analyst thinks the stock has a "compelling value."
The Nvidia Analyst
Bank of America Securities analyst Vivek Arya reiterated a Buy rating on Nvidia stock with a price target of $350.
The Analyst Takeaways
Arya says Nvidia has "durable high-quality growth" in a new investor note.
One of the key points from Arya is the forward price-to-earnings ratio of Nvidia, which now stands at a seven-year low.
"We strongly disagree with the EPS discount and see as an enhanced buy opportunity for a unique, durable growth franchise," Arya said.
The analyst said investors may be overstating high bandwidth memory (HBM) and underestimating Nvidia’s pricing power and scale. Arya expects Nvidia’s gross margins to remain in the mid-70% range going forward.
Arya said Nvidia’s current stock valuation already bakes in a 30% to 35% headwind for earnings per share.
The analyst compares the price-to-earnings ratios of Nvidia to five of the other Magnificent Seven members, showing the valuation compared to Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META).
Here are the price-to-earnings ratios for 2026, 2027 and 2028 based on estimates from the analyst.
| Company | 2026 P/E ratio | 2027 P/E ratio | 2028 P/E ratio |
| Nvidia | 22.9x | 15.7x | 12.4x |
| Apple | 35.0x | 30.9x | 28.5x |
| Microsoft | 21.8x | 18.7x | 15.5x |
| Alphabet | 25.6x | 24.1x | 20.0x |
| Amazon.com | 24.0x | 21.4x | 17.3x |
| Meta Platforms | 15.9x | 16.3x | 13.4x |
| Average without NVDA | 24.5x | 22.3x | 19.0x |
Nvidia is in the middle of the pack for 2026 estimates on a price-to-earnings ratio valuation. The stock jumps to being the cheapest using this valuation method for both 2027 and 2028 based on the estimates.
"We expect upcoming NVDA earnings to reinforce its moats in products, pricing and supply chain."
The analyst said Nvidia should maintain its dominant market share of AI capex over the long term.
"We expect upcoming earnings call to be a positive catalyst, clarifying NVDA’s durable moats across its products, pricing and supply chain."
Nvidia Stock Price Action
Nvidia shares were up 0.43% at $197.77 on Wednesday versus a 52-week trading range of $161.16 to $236.54. Nvidia stock is up 4.5% year-to-date in 2026.
Photo: Blossom Stock Studio / Shutterstock
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