Maybe Nvidia's (NVDA) stock isn't grossly overvalued after a sizzling 237% gain this year, given the arms race to unleash new AI superpowers on the world.

"I think there is a chance for it [to become the world's most valuable company] to happen," veteran tech analyst Paul Meeks said on Yahoo Finance Live. "[If] you think about it, it's going to have to increase its market cap at least 100% from here. I think it could happen, but I would not be bold enough to make that claim yet."

Nvidia is viewed as holding the pole position in the AI space due to its chips that power OpenAI's ChatGPT platform. The company — fueled by voracious demand for its H100 chip — has also inked high-profile generative AI chip deals with ServiceNow (NOW) and Snowflake (SNOW).

The strong demand has triggered a material upward reset in Nvidia's profit forecasts by Wall Street analysts.

Just 90 days ago, Wall Street was banking on Nvidia earning $10.76 per share in profits for its current fiscal year according to Yahoo Finance data. Today, that figure stands at $12.29 per share.

For its next fiscal year, Nvidia's profits are expected to surge at least 67% from the prior year to $20.50 a share. Three months earlier, analysts were modeling for profits of $16.71 a share.

The stock's impressive triple-digit return in 2023 has pushed its trailing twelve-month price-to-earnings ratio (PE) to 65, according to Yahoo Finance data. That's almost three times more than the trailing PE on the S&P 500.

But analysts Yahoo Finance has spoken to say Nvidia's stock still looks cheap when applying other valuation metrics.

Nvidia's stock, for instance, trades on a PEG (price to expected earnings growth) ratio of a mere 0.5 times. A PEG ratio below 1 is often viewed by Wall Street as a potentially undervalued opportunity.

On a forward PE ratio, Nvidia's stock fetches 24.5 times expected earnings — not too far removed from the S&P 500's forward multiple of 21.

Given Nvidia's expected earnings growth over the next 12 months is potentially north of 70% (the S&P 500 is only forecast to grow earnings around 10% in 2024), a case could be made that shares aren't yet priced for perfection.

"This is my best tech idea going into 2024," Meeks contended.

Meeks isn't alone on the bullish Nvidia thesis supported by an attractive valuation.

Researchers at Evercore ISI, led by Matthew Prisco, outlined several catalysts for Nvidia in 2024.

They include a "broadening" of its customer base from large language model startups and consumer internet companies to sovereign AI cloud and enterprise software players.