After Rebounding 45% In Two Months, Analysts Say NVIDIA's Stock Still Has 24%+ Upside

Over the past two months, Nvidia has staged a thrilling market cap counteroffensive. The AI chip giant's stock price has surged over 45%, propelling its market cap back to a lofty $3.4 trillion, now just a step away from overtaking Microsoft as the world's most valuable company. This dramatic shift in market sentiment was ignited by an earnings report that decisively addressed three core concerns.

Last week's earnings report served as a powerful stimulant: It alleviated worries about U.S. semiconductor export restrictions to China by revealing that the Chinese market contributed just 13% of Q1 revenue, with new procurement agreements in the Middle East providing a buffer. Regarding concerns about Blackwell chip production, management confirmed a smooth capacity ramp-up. Most crucially, the report validated the sustainability of AI investments- capital expenditures from Nvidia's four key clients (Microsoft, Meta, Google, and Amazon) are projected to reach $330 billion over the next two years, a 6% increase from current levels.

"Those questions have been answered in the positive for Nvidia," said Thomas Martin, senior portfolio manager at Globalt Investments. "It's time to ramp back up your ownership."

Though the stock remains 8% below its January all-time high, Nvidia's current forward P/E of 29x sits below its 10-year average of 34x and appears reasonable compared to the Nasdaq 100's 26x. More notably, its PEG ratio (price/earnings-to-growth) of under 0.9 is the lowest among the "Magnificent Seven," reflecting conservative market expectations for this high-growth stock."We just haven't seen any kind of slowdown in AI spending, and so long as capex keeps moving up, we're unlikely to see the cycle rollover or Nvidia experience much compression to its multiple," said Samuel Rines, a macro strategist at WisdomTree, who predicts the P/E could rebound above 40x. This view resonates with most analysts: Of the 78 covering Nvidia, just 8 recommend "hold" and only 1 suggests "sell," with the average $170 price target implying 24% upside.

Notably, compared to Amazon, Apple (AAPL.US), and Microsoft's 91% institutional ownership, Nvidia's 74% fund ownership remains relatively low. "Forced buying from underweight funds, combined with exponential AI computing demand, makes new highs before 2026 highly probable," said Angelo Zino, senior analyst at CFRA Research.

As the biggest beneficiary of the AI revolution, Nvidia's stock trajectory has become a litmus test for market confidence. While Microsoft maintains its crown through cloud dominance, Nvidia's quest to rewrite tech history- one GPU at a time- may just be beginning.