After years of high octane gains, Nvidia (NASDAQ: NVDA) appears to be out of stock. If an investor had put £5,000 into chip shares six months ago, that capital would now be around £4,800 (taking exchange rates into account).

Is it game over for this legendary growth stock? Or is it just a pause to catch a breath before the next leg goes up?

Take a break

My point here is that it’s just a matter of taking a break. Between the beginning of 2023 and October 2025, the stock jumped from $20 to $200. At some point, it was likely to witness a prolonged period of “consolidation.” I think that’s what we’re seeing now.

Get ready for the next step higher

I fully expect it to continue its rise at some point in the near future. Because the underlying fundamentals look very strong.

At last month’s GTC conference, for example, CEO Jensen Huang unveiled a host of powerful new products including the Vera Rubin AI platform (which is much more powerful than the current Blackwell platform), the Groq 3 inference chip, and a software platform for OpenClaw. He also announced the launch of a few partnerships for self-driving cars (which will use Nvidia’s self-driving technology).

At the same time, Hwang said he now expects a whopping $1 trillion in revenue from Blackwell and Robin chips through 2027. Late last year, the company was forecasting just $500 billion.

So, it’s not as if the growth story here has come to an end. Growth appears to be accelerating.

Today it is undervalued

Note that after the recent drop in share price, the stock is starting to look very cheap. With analysts forecasting EPS of $8.26 this fiscal year (versus $4.92 last fiscal year), the forward-looking price-to-earnings (P/E) ratio is just 21 (near a seven-year low).

At an earnings multiple, the stock is undervalued in my view. Wall Street analysts seem to share my view here – currently the average price target is almost 50% higher at $264.

Worth a closer look

I will point out that in the current market environment (where investor sentiment is weak due to economic and geopolitical uncertainty), a growth stock would not suddenly rise to $264. For Nvidia’s stock price to resume its long-term upward trend, we will need to see market conditions improve.

Of course, there is no guarantee that it will actually reach this target price. If spending on AI infrastructure from super scalers e.g Microsoft and Amazon drops, or competitors (including scalers) release powerful new AI chips, the growth story here will likely get derailed.

However, from a long-term standpoint, I am bullish on Nvidia as I expect the AI ​​to continue to build. I think it is worth taking a closer look today as it is about 15% below its highs.