After its meteoric rise to become a stock market superstar, Nvidia is often described on Wall Street as “priced to perfection,” meaning that even a small issue could significantly affect its stock price. But is Nvidia really that expensive? And if it is, what should shareholders of other companies say?

Currently, Nvidia’s market value stands at an astounding $2.6 trillion. Only Apple and Microsoft have a higher market capitalization. While $2.6 trillion is a staggering figure, it’s even more impressive considering that just five years ago, Nvidia was valued at only $110 billion. The rise of artificial intelligence (AI) has completely reshaped the landscape, and Nvidia holds a near-monopoly in the sector, struggling to keep up with production demands.

However, the notion of being “priced to perfection” can have its downsides. During the presentation of their Q2 earnings, the stock market found a flaw—Blackwell. The lingering question that Nvidia has yet to answer is whether the issues with the new GPU generation have been fully resolved. The big question remains: How much revenue will Blackwell bring to Nvidia’s coffers?

Since that presentation, Nvidia’s stock has lost 15% of its value, and the price-to-earnings ratio (P/E ratio) for the next fiscal year (which runs until January 31, 2026) has dropped to 26. While 26 might seem low for a company expected to increase its profits by 40% next year (after an expected 120% increase in the current year), it makes Nvidia a bargain from a historical perspective. Over the past decade, the company’s average P/E ratio has been around 31.

Additionally, Nvidia is cheaper compared to companies like Costco (P/E: 50), Colgate-Palmolive (P/E: 28), Mastercard (P/E: 29), Apple (P/E: 30), and Microsoft (P/E: 31), even though these companies are growing at a much slower rate than the AI leader.

Vivek Arya from Bank of America has urged investors not to be swayed by the noise following the earnings report. “Nvidia offers unique growth at a very reasonable valuation,” he said. His view is echoed by 66 other analysts who also recommend buying Nvidia stock. On average, they predict a price target of $148.01, which suggests that the stock could rise by 38% over the next 12 months.