Why Cathie Wood Nvidia stock looks undervalued now
For anyone tracking cathie wood nvidia stock themes, Morningstar now frames Nvidia as a growth-at-a-reasonable-price stock trading about 30% below its $280 fair value. AI CapEx demand still looks strong, and analysts say the cooler valuation underrates near- and medium-term growth.
Key Takeaways
- Morningstar pegs Nvidia fair value at $280, with shares trading about 30% below that mark as of the July 28, 2026 close.
- The firm models roughly 80% fiscal 2027 revenue growth and still sees AI CapEx support as underappreciated.
- A conservative Trefis three-year case points to about 56% upside near $296, even after multiple compression.
- Key risks include customer concentration, in-house rival chips, China export limits, and next-gen product timing.
Why does Nvidia suddenly look cheap?
After Nvidia emerged as the biggest AI beneficiary in 2023, its stock soared with chip demand. Morningstar says the company has kept delivering strong earnings growth in 2026, but the valuation has become more reasonable versus its growth projections and fair value estimate.
That shift is why Nvidia now fits a growth-at-a-reasonable-price profile. Morningstar Chief US Market Strategist Dave Sekera recently highlighted it among stocks still reasonably priced. For more AI hardware coverage, browse our Future Tech & AI Wonders hub.
What is driving the undervaluation case?
Morningstar’s $280 fair value implies about 30 times adjusted earnings for fiscal 2027 and 20 times for fiscal 2028. Given expected AI capital-spending acceleration in calendar 2026, the firm models about 80% total revenue growth in fiscal 2027—likely a peak as the revenue base expands—while still anticipating robust growth ahead.
It also assigns Nvidia a wide economic moat based on GPU intangible assets and high switching costs around Cuda, which only runs on Nvidia GPUs. Cloud vendors and AMD may diversify supply, but Morningstar still views Nvidia’s GPUs and Cuda as industry leaders. See the full Morningstar report for the star rating and uncertainty metrics.
How high could compounding take NVDA?
Trefis sketches a conservative path where revenue compounds at 30% annually, taking the top line from $253.5 billion to about $556.9 billion over three years. Margins ease from 63% toward 60%, and earnings roughly double from $159.6 billion to about $331.5 billion.
Even trimming the P/E from 28.9 times to 21.7 times—below the three-year average of 54.1—the scenario lands near $296, or roughly 56% upside, with market value near $7.2 trillion versus about $4.6 trillion today. Nvidia also has visibility to nearly $20 billion in CPU revenue this year, and VeraCPU opens a new roughly $200 billion addressable market.
What could go wrong for Nvidia bulls?
Morningstar’s biggest risk is the future pace of AI spending from a handful of giant customers that may later optimize or cut budgets. Tech leaders building in-house chips and US restrictions on China sales add further uncertainty, reflected in a Very High uncertainty rating.
Trefis notes product-cycle risk as well: management said it is still early to know whether the VeraRubin ramp can match Blackwell’s velocity. If growth slips below the assumed 30% compounding path, the upside math shrinks quickly.