Nvidia Stock Has More Than 60% Upside According to Analysts' Average Price Target. Should You Buy While the AI Trade Wobbles?

Analysts assert that Nvidia stock possesses over 60% upside, prompting the question of whether investors should purchase amid the wobbling AI trade. Nvidia (NVDA +2.77%) has experienced a 13% decline in share price over the past month, currently trading at approximately $202, significantly lower than the average price target of $327 set by analysts.

This presents a potential gain of around 62% if the target is achieved. Despite the apprehensions surrounding AI spending, I believe this could be an opportune moment to invest in Nvidia stock. Recent tech earnings reports suggest that companies will likely continue investing in infrastructure over the coming years. As an example, SK Hynix, a leading HBM memory company, reported a 328% increase in sales and a 632% increase in operating profit in Q3 due to a surge in AI spending.

With 50% of its memory supply for 2027-2030 already sold out, SK Hynix supplies a significant portion of Nvidia's data center components, indicating a correlation between SK Hynix's demand and Nvidia's substantial orders. Furthermore, Alphabet and Microsoft, holding 35% of the cloud market combined, have reported impressive sales gains from their AI investments, with Alphabet planning to spend up to $205 billion this year on capex.

Microsoft has earmarked $170 billion for fiscal 2027 AI spending. These companies are already reaping the benefits of their investments and are intensifying their spending. For Nvidia, this is a positive sign that AI infrastructure investments are not waning. Nvidia's trailing P/E ratio stands at around 26, slightly lower than the tech sector average of 28.5.

While the company doesn't require immediate investment, the recent price dip offers a buying opportunity for some investors to acquire shares in a modest position or increase their current holdings. Nvidia's fiscal 2027 Q3 results are set to be released on Nov. 17, with Wall Street consensus estimates expecting earnings per share of $2.47 and sales of nearly $109 billion.

Given Nvidia's consistent beat of analysts' earnings expectations in recent quarters, shareholders may be pleasantly surprised once again. More importantly, with customers like Alphabet and Microsoft experiencing significant growth and continued AI investments, Nvidia's long-term growth prospects remain robust.