The market has mispriced Nvidia's stock

Calling for a stock to double in under a year is a bold proclamation. Calling for the world’s largest company to double in less than a year seems downright unrealistic. But that’s exactly what I’m predicting Nvidia (NVDA +0.84%) will do, and I’ve got the math to back it up.

The reality is that Nvidia’s stock is trading at a very low price. I think investors should pounce on it, as the market isn’t ready to value Nvidia for what it’s truly worth, and it will easily cross $10 trillion in market cap.

The market has mispriced Nvidia’s stock

Nvidia is the undisputed leader in GPU computing units, which have become the unit of choice for many artificial intelligence (AI) firms. While some are actively pursuing custom AI computing units, those won’t be able to replace Nvidia GPUs on a large scale because the custom AI chips are designed for one workload. At the same time, Nvidia GPUs can handle nearly anything.

As a result of Nvidia’s market position, it has access to information that the average investor doesn’t because many of its clients are placing orders for chips far in advance so they will be ready to be deployed when a data center facility is ready for them. This gives credence to bold long-term projections such as Nvidia’s projection that the capital expenditures of the top five AI hyperscalers will reach nearly $800 billion in 2026 and rise to $1.3 trillion in 2027.

For the next fiscal year (FY 2028, ending January 2028), Nvidia expects to grow its revenue 70%. That’s simply incredible for the world’s largest company, but it’s exactly where Nvidia’s internal projections point. Nvidia knows what’s coming down the pipeline, so it isn’t going out on a limb by saying it will grow this fast. Furthermore, Nvidia has a long and established track record of exceeding internal guidance throughout the AI race, and I wouldn’t be surprised if that’s the case again with Nvidia.

I think this all adds up to a stock that’s primed to double over the next year, and I’ve got the math to prove it.

Nvidia is a must-buy stock now

For FY 2027 (ending in January 2027), Wall Street analysts expect $411 billion in revenue. I think the odds are high that Nvidia will exceed this expectation, but this is a more conservative estimate. If Nvidia then grows its revenue by 70% in the first half of the year, that would result in a trailing-12-month revenue total of $555 billion. Nvidia’s profit margins have been steadily rising, and it posted a 64% profit margin over the past 12 months. If it can maintain that level, it will generate $355 billion in profits by this time next year.

Now we need to assign a price-to-earnings multiple to the stock. Over the past few years, Nvidia’s valuation multiple has steadily ticked down, and it now trades for 27.5 times earnings.

NVDA PE Ratio data by YCharts

I think that’s far too cheap, as many of its big-tech peers trade for far higher valuations. For example, Apple, which is growing far more slowly, trades for 37 times earnings. If we assign Nvidia a higher price-to-earnings multiple of 30 and apply that to a projected trailing-12-month profit of $355 billion, that yields a market cap of $10.65 trillion.

Currently, Nvidia has a market cap of $5.25 trillion, so this easily exceeds the bar of the stock doubling in under a year. I think this makes Nvidia a no-brainer buy now, as it only needs to do exactly what it says it will do and trade at a reasonable price to achieve this incredible feat.