Can I buy Nvidia stock now?

Investors may be wondering what’s next for NVIDIA, as the company’s stock is up nearly 190% since the beginning of the year and nearly 2,830% over the past five years. (NVDA 0.61%) Even after these big gains, it’s still a buy at the moment. The gains made the company the second-largest company in the world by market capitalization.

It’s clear that Nvidia is riding the artificial intelligence (AI) wave, but here are four reasons why the stock still looks like a buy today despite its strong performance.

1. AI enhancements are still in their infancy

The biggest bullish case for Nvidia is that despite the company’s unusual demand for graphics processing units (GPUs) to help build AI infrastructure, AI buildouts are in the early stages of what is expected to be a long period of time. That seems to be the case. game. Big tech companies and well-funded AI startups like OpenAI and Elon Musk’s xAI are investing in building AI-centric data centers to help train large-scale language models (LLMs) and perform AI inference. I’m pouring it into it.

This can be seen in the increasing Capital Expenditure (Capex) budgets of large technology companies and comments from executives regarding future spending. For example, Alphabet and Meta Platforms both say the biggest risk to their AI spending is underinvestment rather than overspending, while Oracle sees no end in sight for AI infrastructure spending over the next five to 10 years. states.

Meanwhile, Microsoft’s finance leases signed but not yet started (generally for AI data centers) have more than tripled in the past year to a staggering $108.4 billion.

As AI models advance and become more sophisticated, training requires exponentially more computing power. For example, Alphabet says its Llama 4 LLM requires up to 10 times more computing power than previous versions, while xAI’s Grok 3 used five times more GPUs to train Grok 2.

All of this points to a growing need for GPUs, an area where Nvidia is the clear leader.

Image source: Getty Images.

2. Nvidia is the market share leader

While the need for GPUs seems to continue unabated, Nvidia isn’t the only company capable of producing AI chips. Advanced Micro Devices also makes GPUs, while some companies, such as Broadcom, help companies develop custom AI chips for their specific needs.

However, Nvidia has captured more than 80% market share, making it the clear leader in this space. This comes not only from our powerful chip offerings, but also because we have been able to build a wide moat in this space through our CUDA software. Long before the AI ​​craze, Nvidia created the CUDA platform to allow developers to program GPUs using freely distributed software. As a result, CUDA has become the standard program for industry developers to learn to program these chips. As a de facto industry standard, it has become more difficult for other companies to enter the space and capture significant market share.

At the same time, Nvidia recently accelerated chip development from a two-year iteration cycle to a one-year cycle. This should allow the company to constantly offer new and improved designs, giving it not only a technological edge but also pricing power. The company only recently started shipping chips based on the Blackwell architecture, but is already planning to introduce new chips based on the Rubin architecture in 2026.

At this point, there doesn’t seem to be any major threat of NVIDIA losing significant market share.

3. Nvidia has an attractive valuation

Even though Nvidia’s stock price has risen significantly over the past few years, it remains an attractive value given the opportunity at hand. The expected price/earnings ratio (PER) based on analyst forecasts for 2025 is approximately 35 times, and the price/earnings ratio (PEG) is trending at just over 0.9. Generally, a PEG of less than 1 is considered undervalued, and growth stocks often have a PEG well above 1.

NVDA PE Ratio (Forward 1y) Data by YCharts

So Nvidia still has a huge opportunity and wide moat in AI, and it also trades at a very reasonable valuation.

4. The world’s largest companies can still outperform

With a market capitalization of over $3 trillion, investors may be concerned about how far Nvidia can grow. But just because it’s one of the world’s largest companies doesn’t mean its stock can’t outperform for the next 10 years.

For example, Apple was the world’s largest company about a decade ago, with a market capitalization of about $500 million in early 2014. A little more than a decade later, Apple is still the world’s largest company, with a market capitalization of more than $3.5 trillion. This is a 7x increase in 10 years.

Another example is that Microsoft was the largest technology company in early 2010 with a market capitalization of just under $268.56 billion. Ten years later (2020), the company became the second largest technology company with a market capitalization of $1.2 trillion, an increase of almost 4.5 times.

Nvidia’s current massive size won’t prevent the stock from rising significantly in the coming years, especially as the right technology trends are fueling growth.