Here’s My Top AI Stock to Buy in October
As October arrives, there are many AI stocks that look like they would be strong investment options. My pick isn’t anything groundbreaking or new; in fact, it’s the largest company in the world: Nvidia (NVDA +1.09%). Nvidia is my top AI stock pick in October, and it’s fairly simple why: It’s incredibly undervalued.
Nvidia has a reputation for being an expensive stock, but after you dig into it, you’ll see that’s just not the case. I think it’s by far the best AI stock to buy now, and it could be one of the best investments to make in the entire market.
Image source: Nvidia.
2027 will be another year of huge growth
Nvidia has been a top AI stock pick since the AI arms race kicked off — for a good reason. Its GPUs have been the top computing option available for nearly every application, and they are a universal computing unit that nearly every product is compared against. Even though competition is intensifying for which company has the best available option, Nvidia’s new Rubin generation of chips will make an even greater impact than prior iterations. These computing units are starting to become available and will provide more advanced capabilities than prior generations. Nvidia will also charge a higher price tag for them, so it has a built-in revenue escalator that’s launching shortly.
Today’s Change
(1.09%) $2.48
Current Price
$230.86
Key Data Points
Market Cap
Day’s Range
$228.16 – $232.28
52wk Range
$164.27 – $236.54
Volume
98.6M
Avg Vol
123.5M
Gross Margin
74.67%
Dividend Yield
0.23%
This will have a major impact on Nvidia’s growth rate, but investors already know what Nvidia is expecting in 2027. During its Q2 conference call, Nvidia management revealed that it expects a 70% growth rate for fiscal year 2028 (ending January 2028, encompassing nearly all of 2027). That’s major growth, but if you’ve followed Nvidia for any time frame during the AI arms race, this should raise some eyebrows.
Nvidia has outperformed internal expectations essentially every quarter over the past three years. So, if Nvidia says 70% revenue growth, I think investors can safely pencil in a far higher growth rate. This could lead to massive returns for investors, as the market is pricing in almost no growth in Nvidia’s stock right now for 2027. This pricing mismatch is an incredible investment opportunity, and it underscores why Nvidia is my top AI stock to buy in October.
No 2027 growth is priced into Nvidia’s stock
Currently, Nvidia trades at 24.6 times forward earnings.
NVDA PE Ratio (Forward) data by YCharts
That’s a fairly low price historically for Nvidia, as it typically trades at 40 times forward earnings or higher at this time of year. For reference, the S&P 500 (^GSPC +0.19%) trades for about 20 times forward earnings. That makes Nvidia more expensive than the broader market, but it’s an earned premium because it’s growing so much faster than the market is (the S&P 500 usually grows at about 10% per year).
However, investors know that Nvidia is expected to grow at a 70% pace next year. If that growth rate is baked into Nvidia’s forward earnings calculation, the stock looks dirt cheap.
NVDA PE Ratio (Forward 1y) data by YCharts
Nvidia trades for a mere 14.6 times next year’s earnings, making the stock look like an absolute bargain right now. If Nvidia can hit analyst expectations and rise to 30 times trailing earnings by the end of the next fiscal year, the stock will more than double.
That’s a very bullish setup for Nvidia, and all it needs to do is deliver on expectations. However, I wouldn’t be surprised if Nvidia blows past those estimates, because it has a very strong track record of doing just that. It’s one of the best stocks investors can buy right now, and I’m incredibly bullish on its outlook.
