Wall Street's top pick for an undervalued artificial intelligence (AI) stock in 2026 is right before your eyes

Wall Street's Perspective on Nvidia: A Hidden Opportunity

Financial analysts on Wall Street regularly set one-year price targets for the stocks they monitor, offering insight into their overall outlook. While it's not advisable to blindly follow these projections without conducting your own due diligence, these analyst forecasts can highlight stocks where there is a significant gap between current valuations and future expectations.

One standout stock, according to analyst estimates, is Nvidia—the world's largest company by market capitalization. Currently trading at around $178 per share, Nvidia's average price target sits at $265. If the stock reaches this target, it would represent an impressive gain of nearly 50% within a year.

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What Drives Nvidia's Exceptional Growth Potential?

As companies expand, maintaining high growth rates becomes increasingly challenging. For instance, doubling revenue from $50 billion to $100 billion is a major feat, but repeating that growth requires an even larger absolute increase. Despite this, Nvidia continues to defy expectations.

The insatiable demand for artificial intelligence (AI) computing hardware means that major tech firms and hyperscalers are eager to purchase as many Nvidia chips as possible. While competitors exist, Nvidia's GPUs offer unique advantages, granting the company significant pricing power in the market.

With tech giants planning record-breaking investments in data centers through 2026 and beyond, it's no surprise that analysts are optimistic about Nvidia's future. These large-scale projects take years to complete, and the installation of computing equipment typically occurs in the final stages. As a result, Nvidia's growth trajectory is expected to extend well into the future.

Company leadership anticipates that global data center capital expenditures could reach $3 trillion to $4 trillion by 2030. This aligns closely with third-party research from McKinsey & Company, which forecasts cumulative spending of $7 trillion by the end of the decade.

Nvidia's Valuation: Growth Meets Affordability

Despite its rapid expansion, Nvidia is currently trading at one of its most attractive forward earnings multiples since the AI investment boom began in 2023.

At a forward price-to-earnings ratio of 21.6, Nvidia is actually slightly less expensive than the S&P 500 average, which stands at 21.7. It's important to note that these figures are based on projected future earnings and are therefore subject to change. This valuation suggests that the market expects Nvidia to have another strong year in 2026, followed by more average performance—an outlook that may underestimate the company's long-term potential.

Given the ambitious spending plans of hyperscalers, Nvidia's own forecasts, and independent market analyses, it's likely that the company will continue to grow beyond 2026. For now, the stock appears undervalued due to the market's short-term focus.

Based on current analyst price targets, Nvidia offers more near-term upside than most other major tech stocks. Investors may want to consider increasing their holdings or starting new positions, as AI-related spending shows no signs of slowing and Nvidia remains a leader in the AI chip sector. Those who invest now may look back in a year and be pleased with their decision.

Is Now the Time to Invest in Nvidia?

Before making an investment in Nvidia, consider this:

The Motley Fool Stock Advisor team has recently identified what they believe are the 10 top stocks to buy right now—and Nvidia is not on that list. The selected stocks have the potential to deliver substantial returns in the years ahead.

For example, when Netflix was recommended on December 17, 2004, a $1,000 investment would now be worth $508,607! Similarly, when Nvidia was recommended on April 15, 2005, that same investment would have grown to $1,122,746!*

As of March 13, 2026, the Stock Advisor's average return stands at 933%, far surpassing the S&P 500's 188%. Don't miss out on the latest top 10 picks—join Stock Advisor and become part of a community of investors focused on individual success.

*Stock Advisor returns as of March 13, 2026.

Keithen Drury owns shares of Nvidia. The Motley Fool also owns and recommends Nvidia. For more information, see The Motley Fool's disclosure policy.

Wall Street's Favorite Artificial Intelligence (AI) Bargain Stock for 2026 Is Hiding in Plain Sight was first published by The Motley Fool.