Think Nvidia Is Overpriced? The Irony Keeps Me Buying Again and Again

Think Nvidia Is Overpriced? The Irony Keeps Me Buying Again and Again

Alex Sirois

Wed, September 16, 2026 at 4:15 PM GMT+3 5 min read

Quick Read

• NVDA's forward P/E of 24 and PEG ratio of 0.46 reveal a GARP stock hiding inside a $5 trillion market cap.

• AMD and AVGO can't match NVDA's Networking segment, which alone generated $40 billion in one quarter, up 138% year over year.

• Analyst EPS estimates for NVDA climbed from $12.67 to $15.57 in just 90 days, signaling earnings power is outrunning the valuation multiple.

• Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and NVIDIA didn't make the cut. Enter your email to see the names that beat NVDA. The report is free. Enter your email and see if any of your stocks made the cut.

I keep hitting the buy button on NVIDIA (NASDAQ:NVDA), and the louder the "it's overpriced" chorus gets, the more shares I add. That sounds reckless until you look at what the multiple is actually paying for.

Why the Expensive Label Misses the Point

At $212.17 and a $5.12 trillion market cap, NVIDIA looks like the definition of a stretched stock. The trailing P/E of 43 is the number every skeptic quotes. The one they skip is the forward P/E of 24 and a PEG ratio of 0.46. Growth at a reasonable price rarely arrives in mega-cap wrapping, and that mismatch is what keeps me buying. The multi-trillion dollar valuation looks intimidating at face value, yet under the hood NVIDIA behaves like a GARP stock.

Three Reasons the Numbers Keep Winning the Argument

Start with growth. Q2 FY2027 revenue landed at $96.22 billion, up 105.8% year over year, with Data Center alone at $89.02 billion, up 117%. Networking inside that segment printed $40.31 billion, up 138%. Management then guided Q3 to $108.0 billion, plus or minus 2%, and told analysts on the call to expect roughly 70% revenue growth in fiscal 2028. That is a company still accelerating at a scale most large caps stopped attempting a decade ago.

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Quality of earnings is the second pull. Non-GAAP gross margin ran 75.0%, return on equity is 101.49%, and return on invested capital is 92.21%. Debt-to-equity sits at 0.073 with interest coverage of 503.4x. Fortress balance sheet, operator-level margins.

Third, capital return shows up. Q2 free cash flow was $21.34 billion, and NVIDIA returned roughly $26.0 billion to shareholders through buybacks and dividends, with about $99.0 billion remaining under the repurchase authorization. The dividend barely registers, and the buyback carries real weight.

Why I Pass on the Obvious Alternatives

Every time I check Advanced Micro Devices (NASDAQ:AMD) or Broadcom (NASDAQ:AVGO), I come back to the same wall. NVIDIA's Networking business by itself did $40.31 billion in a single quarter, up 138%. That is a networking company living inside an accelerator company, at a scale neither the pure GPU challenger nor the custom-silicon challenger has produced in a public quarterly earnings report. When I can own a platform earning a 75.0% non-GAAP gross margin and a 92.21% ROIC, I stop shopping for a proxy.

Risk I Refuse to Wave Away

The scary line in the filings is $279 billion in supply commitments, most of it memory for Vera Rubin, alongside $108.5 billion in guarantee obligations tied to AI cloud partners. Add customer concentration among a handful of hyperscalers and DSO stretching from 45 to 60 days, and the shape of a demand shock becomes visible. Management calls the arrangement durable and fungible: "We recognize the scale of this support, and we know some will call this circular financing. We see it differently." I take the risk seriously. I also weigh it against top-five hyperscaler CapEx management pegged at nearly $800 billion in 2026 and $1.3 trillion in 2027. The demand pool is wider than any one customer.

What Keeps the Buy Button Live

Vera Rubin is shipping, and Huang says it delivers 30X higher throughput per megawatt and 35X lower token costs versus Grace Blackwell Ultra. Analyst EPS for the fiscal year ending January 2028 has climbed from 12.67 ninety days ago to 15.57 today. When earnings power keeps racing ahead of the multiple, the overpriced label starts to look like a mispricing I get to keep exploiting. That is why my next buy is already scheduled.

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