Semiconductor stock share prices since OpenAI commercially launched ChatGPT on November 30, 2022 NVIDIA(NASDAQ: NVDA) An increase of 977%. This astonishing growth has pushed Nvidia’s market capitalization to well over $4 trillion, making it the most valuable company in the world.
Despite Nvidia’s historic achievements in the artificial intelligence (AI) revolution, smart investors understand that the company’s rally has only just begun.
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Let’s dive into the tailwinds driving Nvidia’s current trajectory and explore some of the key drivers for the company’s future growth. Based on that, I’ll assess the company’s valuation situation and explain why Nvidia looks like a stock worth buying now without hesitation.
Image source: NVIDIA.
In fiscal year 2026 (ending in late January), Nvidia generated $216 billion in revenue, a year-on-year increase of 65%. The company’s largest source of sales comes from its data center business.
Artificial intelligence hyperscalers, including Microsoft, letter, Amazonand meta platformThe past few years have seen unprecedented investment in infrastructure. What’s more, these investments are accelerating—big tech companies are expected to spend more than $600 billion on capital expenditures (capex) by 2026.
MSFT capital expenditure (quarterly) data is provided by YCharts.
Nvidia’s Blackwell graphics processing units (GPUs) and CUDA software ecosystem have become staples in the data center, cementing the company’s position as the core architect of next-generation artificial intelligence model training and inference.
That said, many large tech developers are also exploring designing their own custom chip architectures. While this may initially seem like a headwind for Nvidia’s chip empire, the company is strategically positioned to grow well beyond the data center space.
Nvidia’s booming data center chip business has huge pricing power over the competition. As a result, the company built lasting profitability. In turn, Nvidia has been strategically investing its cash flow into several new growth opportunities.
By the end of 2025, NVIDIA has invested US$5 billion Intel. Through this cooperation, Nvidia has entered the AI ​​PC market and deepened its ties with the consumer electronics market.
In October, Nvidia partners with data analytics experts Palantir Technology. Palantir will integrate Nvidia’s AI models into its Artificial Intelligence Platform (AIP) to help implement enterprise AI workflows.
Also in October, Nvidia launched its Arc Aerial RAN computer and invested $1 billion Nokia.
Back in January, Nvidia invested $2 billion in neocloud company core weaving. Nvidia has been a long-time supporter of CoreWeave, and this latest deal underscores the company’s commitment to continued AI infrastructure development.
Recently, Nvidia invested $2 billion lumenexperts in the manufacturing of advanced optical and laser components.
Most importantly, the collaborations detailed here share a common theme: Nvidia is working to consolidate its technology stack beyond the data center and into new end markets. From consumer electronics to real-time data analytics and telecommunications, Nvidia is diversifying its business into more edge applications across various industry sectors.
Further, these partnerships will help Nvidia play a central role in the next generation of services such as agent AI, physical AI, robotics and autonomous systems brought to market over the next decade.
According to the following trends, Nvidia is trading near the cheapest levels of the AI ​​revolution based on price-to-earnings (P/E) and forward P/E multiples.
NVDA P/E data is provided by YCharts.
To me, these dynamics may indicate that the market is starting to price Nvidia as a mature business, rather than one in the midst of explosive growth.
Additionally, the discount its forward price-to-earnings multiple has relative to forward periods may indicate that some investors are skeptical about Big Tech’s ability to sustain record infrastructure spending and Nvidia’s ability to capture that spending.
If you take a longer view, Nvidia’s latest earnings report once again showed strong revenue and profit growth. Even better, management is complementing this with strong forward guidance.
For these reasons, Nvidia appears to be an excellent buy-and-hold opportunity, as numerous AI-driven tailwinds have yet to impact the company’s growth profile. While short-term volatility is likely to occur as investors digest the broader macro factors affecting Nvidia, the company remains solidly positioned to continue growing throughout the AI ​​infrastructure era.
In my opinion, Nvidia stock is too cheap to ignore, and smart investors should take advantage of the company’s attractive price point now.
Before buying Nvidia stock, consider the following factors:
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Adam Spatacco has worked at Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia and Palantir Technologies. The Motley Fool has positions and recommendations at Alphabet, Amazon, Intel, Lumentum, Meta Platforms, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
A once-in-a-decade investment opportunity: The best artificial intelligence (AI) stocks to buy in March Originally published by The Motley Fool
