MW Nvidia's stock was just named a top pick for a reason that might be surprising
By Britney Nguyen and Emily Bary
The chip giant's stock has actually been an AI laggard lately, creating opportunity for investors
Nvidia, led by CEO Jensen Huang, was added to Wolfe Research's "alpha list" on Tuesday.
On the surface, it may not seem like a particularly innovative top pick.
But in elevating Nvidia's stock (NVDA) to his firm's "alpha list," Wolfe Research analyst Chris Caso hit on an interesting point: Nvidia's stock has actually been a laggard lately.
The stock "is up 'only' 36% over the past year, underperforming other AI related names," Caso said on Tuesday - contrasting its performance with that of Micron Technology $(MU)$, which is up about 300% since the start of 2025. "We think the reason for underperformance is threefold - the late launch of Blackwell, concerns about the sustainability of AI spending in general, as well as concerns about share losses to custom AI solutions," Caso wrote.
See also: Investors should buy AMD's stock now. This analyst explains why he changed his mind.
Of course, over a longer period, Nvidia's stock has been a standout - soaring 1,000% over three years, compared with a 500% gain for Micron's stock and a 75% increase for the S&P 500 SPX.
Caso thinks Nvidia's stock looks attractive because it's trading at just 23 times Wolfe's estimates for its earnings per share in 2026, well below what he said was its five-year average of about 35 times.
See more: Nvidia had a chilling effect on these power stocks. Are investors being too harsh?
Nvidia's Blackwell artificial-intelligence platform is fully ramping, Caso noted, while the following Rubin platform looks on track to ramp up in the second half of this year. And Rubin's "specs look compelling," he added, pointing to its AI inference performance being five times that of Blackwell's.
"The continuous jumps in performance allow [Nvidia] to price to value, and to hold margins," Caso said.
Recent comments on pricing for Blackwell Ultra and Rubin had the analyst "positively surprised." He said he sees them as "a source of upside" to estimates, and as an indicator that Nvidia still has a competitive moat around its business.
In Caso's view, Google's tensor processing units are Nvidia's "main competition" compared to other custom chip projects that are not scaling as quickly. However, Google's move to deploy the chips in its data centers for third-party customers is "still likely to be limited in scope," he noted.
Caso also sees at least $40 billion in upside to the revenue consensus for Nvidia in 2026, based on recent guidance from the company. Nvidia said in October that it had visibility into more than $500 billion in revenue from Blackwell and Rubin from then until the end of this year, not counting business in China. Last week, Nvidia CFO Colette Kress said that number "has definitely gotten larger," Bloomberg reported.
Meanwhile, Nvidia expects to start selling its H200 chips in China, which could be an incremental benefit, Caso said.
Don't miss: Nvidia just sent a message to rivals with its latest chip announcements
-Britney Nguyen -Emily Bary
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 13, 2026 14:20 ET (19:20 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments