Nvidia (NASDAQ:NVDA) has become the cornerstone of AI infrastructure, and UBS analysts see significant upside potential as the company approaches its fiscal fourth-quarter earnings report on February 25. With AI adoption accelerating and demand for GPUs surging, NVDA stock remains a favorite among semiconductor investors.

Why Nvidia Stock Matters

Nvidia is headquartered in Santa Clara, California, and led by CEO Jensen Huang. Its GPUs are essential for training large language models (LLMs) and powering AI data centers. These technologies are now critical for industries ranging from cloud computing to autonomous vehicles. NVDA stock has rewarded long-term holders, with the stock up substantially over the past two years, though it has remained nearly flat so far in 2026, returning just 2%. In comparison, the iShares Semiconductor ETF (SOXX) has returned 20% year to date, highlighting Nvidia’s relative underperformance and potential opportunity.

Valuation and Growth Metrics

UBS analysts note that Nvidia stock is still attractively valued. Its forward price-to-earnings (P/E) ratio is 27.03x, which is reasonable considering expected growth. The PEG ratio of 0.58x suggests NVDA remains undervalued relative to projected earnings growth of 64.52% over the next year. Other metrics support this view: the forward EV/EBITDA stands at 33.48x, below the five-year average of 38.35x, while the forward price-to-cash-flow metric shows a 6.7% discount. Even after a 44% gain over the past 12 months, Nvidia appears to trade below its historical valuation, making it an appealing opportunity for growth-focused investors.

Upcoming Earnings Report

The Q4 earnings report on February 25 has investors excited. In Q3, NVDA beat expectations and guided higher, but the stock barely moved. UBS analyst Timothy Arcuri now expects $76 billion in revenue for Q4, above the prior guidance of $65 billion. Despite rising input costs, Nvidia management has indicated that gross margins will likely hold in the mid-70s. Additionally, the exclusion of China revenue from guidance could serve as a tailwind if geopolitical tensions ease, further boosting investor confidence.

Analyst Outlook

UBS recently raised Nvidia’s price target from $235 to $245. Across Wall Street, the average target price is $255.34, implying 36% upside from current levels. Analysts point to NVDA as a key beneficiary of AI adoption, with a dominant position in GPUs, enterprise AI solutions, and cloud infrastructure. As AI continues to reshape technology, Nvidia stock is positioned as a market leader with strong growth prospects and resilience amid broader semiconductor market volatility.

Risks to Consider

Despite the bullish case, potential risks remain for Nvidia stock. The semiconductor sector is cyclical, and any slowdown in AI adoption or cloud spending could negatively affect revenue growth. Additionally, rising competition from Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) in GPUs and AI solutions could put pressure on margins. Supply chain disruptions, rising chip costs, or regulatory hurdles could also weigh on performance. Investors should balance these risks against the strong growth outlook and long-term AI-driven demand when considering NVDA stock.

Conclusion

Nvidia stock combines solid fundamentals, AI-driven growth, and attractive valuation metrics, making it an intriguing pick before the February 25 earnings report. While past earnings have not always moved the stock, the upcoming quarter could catalyze upside. Investors looking for exposure to AI infrastructure may find NVDA stock an appealing option to buy or hold as the technology sector evolves rapidly. With UBS analysts highlighting favorable conditions and a potential 36% upside, NVDA remains a top AI investment candidate for 2026.

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