Nvidia (NVDA 1.27%) hasn't generally been known as a dirt cheap stock. Investors have rushed to get in on this artificial intelligence (AI) leader over the past several years, and that's pushed valuation higher. The company has established itself as the dominant AI chip company, so investors expect this player to benefit as the high-growth AI story unfolds.
And Nvidia has benefited from AI since the technology's earliest days, as a matter of fact. Customers love the company's powerful graphics processing units (GPUs), or AI chips, as well as the portfolio of related products that help them get the AI job done.
Nvidia stock has soared over time thanks to this leadership, but in recent months, investors have hesitated to get in on AI stocks. And this has dragged down Nvidia stock -- and its valuation. Is Nvidia a no-brainer buy right now? Let's find out.
Image source: Getty Images.
Nvidia's successes
So, first, let's take a quick look at Nvidia's success story and then at the elements that have thrown stock performance off track. As mentioned, Nvidia has become an AI superpower, selling the world's most powerful chips and accompanying products. This has driven explosive growth over the past few years, and the recent quarter confirms the ongoing momentum.
In the fourth quarter, Nvidia's revenue and profit surged in the double digits to $68 billion and $42 billion, respectively. Revenue has reached record levels, driven by demand from AI data center customers.
Though this is positive, over the past few months, investors have worried about the general path of AI. They're concerned about the high levels of AI spending and have questioned whether future earnings will justify such an investment. This has weighed on a variety of AI stocks, including Nvidia. The usually effervescent stock is little changed so far this year.
NASDAQ: NVDA
Key Data Points
All of this has left Nvidia trading at dirt cheap levels, close to its lowest over the past year.
NVDA PE Ratio (Forward) data by YCharts
Near-term turbulence
Is Nvidia a no-brainer buy at this level? It's important to note that the near-term turbulence may not be over. Investors might continue to worry about the AI situation until they see additional evidence in the quarters to come that AI growth isn't a short-term trend -- and that investment is justified. So Nvidia stock may not immediately soar.
That said, it's never a good idea to time the market -- it's almost impossible to get in on a stock at its very lowest. Instead, it's a better idea to buy when the stock looks reasonably priced, and you're confident about the company's long-term prospects.
Today, Nvidia's price is dirt cheap, and the company is well-positioned to deliver solid growth over time, and this makes it a no-brainer AI stock to get in on right now.
