Nvidia stock wobbly after hitting record high, but analysts see more upside

Shares of Nvidia rose in early trading on Monday, extending a breakout rally that has pushed the stock to record highs.

However, at the time of writing, shares of the chip maker had given up most of those gains to trade mostly flat.

Investors are looking ahead to a key week of earnings from major technology companies.

The stock was down around 0.12% to $208.30 in early trading, following a 4.3% jump on Friday that saw it close at $208.28—surpassing its previous record from October 2025.

The company's market cap also pushed past the $5 trillion mark on Friday.

Nvidia’s recent move marks a decisive break from a trading range that had persisted for several months.

The stock had struggled to maintain upward momentum after pulling back from prior highs late last year, but last week’s rally signalled renewed investor confidence in the company’s growth trajectory.

The breakout comes amid sustained enthusiasm for the semiconductor sector, particularly companies linked to artificial intelligence infrastructure.

Big Tech earnings in focus

Investors are now turning their attention to upcoming earnings reports from major technology firms, which are expected to provide critical insights into demand for AI chips.

Companies including Microsoft, Alphabet, Meta Platforms, and Amazon are set to report March-quarter results this week.

A key focus for Nvidia investors will be capital expenditure guidance from these firms, as it offers a proxy for future spending on AI infrastructure and, by extension, demand for Nvidia’s chips.

BofA highlights valuation upside

BofA Securities reiterated a Buy rating on Nvidia with a $300 price target, citing potential upside from both valuation and capital allocation strategies.

The firm said Nvidia could shift toward increased shareholder returns as its major ecosystem investments near completion.

Such a move could attract a broader base of investors, including dividend-focused funds, and reduce concerns around large acquisitions or complex vendor financing arrangements.

According to BofA, Nvidia trades at less than 20 times its projected 2027 earnings, compared with an average of 41.5 times for other “Magnificent Seven” technology stocks.

At present, the stock has a price-to-earnings ratio of 42.69 and a price-to-earnings-growth (PEG) ratio of 0.63, indicating that its valuation may not fully reflect its growth potential.

Investors use P/E multiples to gauge a stock’s valuation relative to its anticipated future earnings.

With the growth of online trading apps, tracking such metrics has become significantly easier and more accessible to market participants.

The firm also noted that Nvidia trades at approximately a 30% discount on a market capitalisation-to-free cash flow basis relative to peers, reflecting investor uncertainty around long-term growth durability and capital allocation.

BofA said increased cash returns to shareholders could help address these concerns by signalling confidence in the sustainability of Nvidia’s growth.

Such a shift could also support a re-rating of the stock by narrowing the valuation gap with peers and expanding its investor base.

Outlook hinges on demand signals

Nvidia’s near-term trajectory is likely to depend on signals from Big Tech regarding AI-related capital expenditure.

Strong spending commitments would reinforce the company’s central role in the AI ecosystem and support its recent breakout, while any signs of moderation could test the sustainability of its rally.

For now, the stock’s move to record highs reflects continued confidence in its leadership position, even as investors await further confirmation from upcoming earnings.