These last two weeks have been uncomfortable for investors as the stock market has rapidly corrected nearly 10% off its recent highs. Fresh news about incoming tariffs, major federal spending cuts and rising geopolitical tensions have created an environment of uncertainty as the new administration shakes up the global economy.

While it can be easy to get caught up in the bearish news, and I do believe this remains a market where investors should be cautious, buying opportunities are beginning to arise. Most notably, the markets favorite stock over the last two years, Nvidia (NVDA), the world's leading AI hardware company has traded down to a compelling level.

As of today, Nvidia is trading near its cheapest relative valuation in recent history and there is little evidence that AI spending, the driving factor behind the company’s ascent, is going to slow. Furthermore, analysts have again raised earnings estimates this week, while NVDA stock price action approaches a key technical level. In this article, I will detail why investors may consider adding Nvidia stock to their portfolios.

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Nvidia Shares Trading at Fair Valuation

Now that its stock price has fallen 15% since the start of the year, Nvidia is trading at a forward price to earnings multiple that is compelling from multiple perspectives. Based on expectations of next year’s earnings the company now trades at a 25x multiple and just 20x 2027 earnings. For reference, Nvidia’s 10-year median forward earnings multiple is 45.1x, putting its current valuation well below the historical average.

Another measure of valuation, which discounts forecasted earnings growth called the PEG ratio also paints an attractive picture. With EPS projected to climb 25.6% annually over the next three to five years, Nvidia boasts a PEG ratio just below 1, a discount based on the metric.

Analysts Continue to Raise Earnings Forecast for Nvidia

Although earnings upgrades had finally slowed after two years of climbing relentlessly, analysts have again begun to raise earnings forecasts. In the last week, analysts have boosted earnings estimates by as much as 5.3%, giving Nvidia a Zacks Rank #2 (Buy) rating.

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Key Technical Levels on NVDA Stock

Nvidia stock is now flat over the last eight months. While this may be concerning for some investors, to me it looks like stock has corrected in time rather than price. Additionally, the price has moved down to an interesting confluence of technical levels indicating a potentially positively skewed buying point. With price down to the bottom of a six-month range and a one-year broader channel, it appears to be a logical place for buyers to begin stepping up.

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Should Investors Buy Shares in NVDA?

Based on its reasonable valuation, strong earnings growth forecasts and analyst upgrades as well as a technical catalyst, I believe that Nvidia is again a very compelling investment. However, that doesn't mean the stock can’t continue to push lower. There are considerable risks hanging over this market, and buying some now, with a plan to buy more if the stock falls lower may be a prudent plan.

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This article originally published on Zacks Investment Research (zacks.com).

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