Is Nvidia Stock Still a Strong Buy in 2026?

The question of whether Nvidia (NVDA) remains a compelling investment in 2026 hinges on three pillars: the company's dominance in AI-driven growth, its valuation relative to earnings potential, and its strategic re-entry into the Chinese market. After a year of extraordinary performance fueled by the AI revolution, investors must weigh whether the stock's current price reflects its future potential-or if it still offers a margin of safety.

AI-Driven Growth: A Structural Tailwind

Nvidia's ascent in 2026 is inextricably tied to the global surge in AI infrastructure demand. The company's data center segment, which accounts for the lion's share of its revenue, delivered $51.2 billion in Q3 2026, a 66% year-over-year increase. This growth is driven by the Blackwell AI supercomputers and the H200 GPU, which have become the de facto standard for large-scale AI model training. According to a report by Bloomberg, Chinese tech firms alone have placed orders for over 2 million H200 units, underscoring the global appetite for Nvidia's hardware.

The momentum shows no signs of slowing. Analysts project 65% revenue growth for 2026 and an additional 50% in 2027. This trajectory is underpinned by the broader AI ecosystem: as enterprises and governments invest in generative AI, cloud providers, and edge computing, demand for Nvidia's GPUs-and by extension, its revenue-will remain robust. Morningstar has raised its fair value estimate for Nvidia to $225 from $190, citing "unprecedented visibility into 2026 revenue."

Valuation: A Compelling Mismatch

Despite its rapid growth, Nvidia's valuation appears to offer a discount relative to its earnings potential. As of early January 2026, the stock trades at a trailing P/E of 45.53, below its 10-year historical average of 53.33. More strikingly, its forward P/E is estimated at 25x, a level typically reserved for companies with stable, mature earnings rather than those growing at 60%+ annual rates. This discrepancy suggests the market may be underestimating Nvidia's near-term profitability.

The PEG ratio, which compares the P/E to earnings growth, further reinforces this view. At 0.78, Nvidia's PEG indicates the stock is undervalued relative to its projected earnings expansion. Stifel analysts note that the P/E ratio is "low for a company generating 65% revenue growth," arguing that the market has yet to fully price in the company's dominance in AI infrastructure.

China Re-Entry: A Game-Changer with Risks

Nvidia's re-entry into the Chinese market in 2026 represents both a significant revenue opportunity and a geopolitical risk. The Chinese government has approved the import of H200 chips for commercial use, excluding military and government applications. This has unlocked a flood of orders, with Chinese firms securing over 2 million H200 units at $27,000 each-a potential $54 billion revenue stream before the 25% U.S. export levy.

However, the company has hedged against regulatory uncertainty by requiring Chinese buyers to pay 100% of the order value upfront, with no refunds or cancellations allowed. This approach mitigates cash flow risks but also signals the volatility of the regulatory environment. Despite these precautions, the scale of demand is undeniable: Chinese tech firms view the H200 as critical for maintaining competitiveness in AI, and TSMC's planned production ramp-up in Q2 2026 will help meet this demand.

Risks and Considerations

While the case for Nvidia is strong, investors should not ignore potential headwinds. Regulatory shifts in China could disrupt the current trajectory, and competition from rivals like AMD and Intel is intensifying. Additionally, the stock's P/E ratio, while historically low, still implies a high degree of confidence in sustained growth. If AI adoption slows or supply chains face disruptions, the valuation could compress further.

Conclusion: A Buy with Caution

Nvidia's 2026 prospects remain compelling. The company is at the forefront of an AI revolution that shows no signs of abating, its valuation offers a discount to intrinsic value, and its re-entry into China provides a massive revenue tailwind. While risks persist-particularly in the regulatory and competitive landscapes-the fundamentals justify a "strong buy" rating. For investors with a medium-term horizon, Nvidia appears to offer both growth and margin of safety in a market still grappling with the full implications of artificial intelligence.