Should You Buy Nvidia Stock in October? What Its Decade-Low Valuation Signals

Nvidia reported triple-digit growth in its latest quarter, with revenue reaching $96 billion and profit $59 billion, while its shares trade at 28x trailing-12-month earnings, near a decade low. The article argues this valuation offers a long-term buying opportunity given Nvidia's AI-chip leadership, product breadth, and proposed more-than-$12 billion acquisition of Hugging Face. Near-term risks include inflation, geopolitical uncertainty, and a potential pause in AI-infrastructure spending; Nvidia shares are projected to rise about 20% in 2026 after gaining 1,100% over the prior three calendar years.

Analysis

The relevant question is not whether NVDA screens cheaply versus its own history, but whether consensus AI infrastructure estimates have finally moved from capacity build-out to utilization-driven demand. A lower trailing multiple can coexist with downside if hyperscaler capex growth decelerates before inference revenue broadens; NVDA’s earnings multiple is highly sensitive to any evidence that customers are sweating installed clusters rather than expanding them. Validate the reported platform acquisition and financial figures independently before incorporating them: a large software acquisition would introduce integration risk and could dilute the premium-margin hardware narrative.

Near term (days to weeks), macro de-risking can keep NVDA’s beta elevated despite a seemingly reasonable earnings multiple; lower real yields and stable semiconductor lead times matter more than retail valuation framing. Over the next 1-3 months, the decisive catalyst is commentary from MSFT, GOOGL, AMZN and META on 2027 AI capex, plus NVDA’s ability to sustain pricing and system-level gross margin through product transitions. A capex pause would also pressure TSM and AI-networking suppliers such as AVGO, while benefiting CPU- and custom-ASIC alternatives only if the slowdown reflects customer bargaining power rather than broad demand weakness.

Contrarianly, the market may be too focused on an abrupt AI-spend cliff and too little on vendor consolidation: customers reducing experimental deployments may concentrate remaining budgets in the highest-performing software/hardware stack, preserving NVDA share even with lower industry growth. The bearish thesis is falsified by sustained hyperscaler capex guidance and stable NVDA data-center gross margin; it is validated if two or more major cloud customers guide AI capex down or cite materially longer accelerator deployment/utilization cycles.

Key Decisions for Investors

• Accumulate NVDA only in tranches ahead of the next hyperscaler reporting cycle, sized as a 6-12 month core long rather than a valuation-driven trade. Target a 15-25% upside from multiple stability plus earnings revisions; cut exposure if data-center gross-margin guidance falls more than 300bp sequentially without an offsetting revenue acceleration.
• Express relative confidence through long NVDA / short AMD in equal dollar beta-adjusted notional for the next 1-3 months. The trade captures continued ecosystem and software lock-in while limiting broad AI-semiconductor and rates exposure; exit if AMD demonstrates a material upward revision to accelerator revenue or NVDA guides a meaningful share/pricing concession.
• Use a downside hedge rather than outright short exposure: buy 3-6 month SMH put spreads around the next earnings cluster against NVDA longs. This protects the common-capex shock that would hit NVDA, TSM and AVGO simultaneously, while preserving upside if spending remains concentrated in market leaders.
• Set an event alert on MSFT, AMZN, GOOGL and META aggregate AI-capex guidance. A sequential reduction by at least two companies is the signal to reduce NVDA and add semiconductor-index hedges; absent that confirmation, treat macro-driven weakness as a potential entry rather than proof of a demand reset.