Nvidia Investment: Key Reasons to Consider Buying Before 2026
Nvidia remains a compelling investment as we approach 2026. The company is positioned strongly in the burgeoning artificial intelligence (AI) sector and continues to showcase impressive growth. Here are three key reasons to consider buying Nvidia stock now.
Nvidia’s Strong Growth Performance
Nvidia has experienced remarkable growth, especially evident in its latest quarterly report. During this period, the company’s revenue jumped 62%, totaling approximately $57 billion. This figure reflects a growth trajectory that has seen its revenue increase more than threefold over the last two years and nearly tenfold over the past three years.
A significant portion of this growth can be attributed to the expanding AI infrastructure. Roughly 90% of Nvidia’s revenue is derived from its data center segment, where its graphics processing units (GPUs) play a crucial role in training large language models (LLMs) and executing AI inference tasks. Additionally, revenue from Nvidia’s data center networking portfolio soared by 162% last quarter, reaching $8.2 billion.
The Demand for AI Infrastructure
The demand for AI-related infrastructure continues to surge, with major cloud computing companies like Amazon, Microsoft, and Alphabet preparing for aggressive investments in 2024. They are all currently facing capacity constraints and are intensifying efforts to enhance their AI capabilities. This trend indicates a robust market potential for Nvidia’s products.
- Amazon, Microsoft, and Alphabet increasing spending on AI infrastructure
- Oracle investing $300 billion in data centers for OpenAI
- Global nations announced investments in AI data centers
In recent developments, Nvidia received approval from the U.S. government to sell its H200 chip to select commercial customers in China. This follows a previous ban on GPU sales to the region, allowing the company to leverage its advanced technology in that marketplace.
Nvidia’s Competitive Advantages
Nvidia enjoys a strong competitive edge, often described as a ‘wide moat’ thanks to its CUDA software platform. This platform has enabled developers to program its GPUs efficiently beyond their original focus on gaming graphics. By promoting CUDA in academic and research environments, Nvidia has fostered a new generation of programmers familiar with its technology.
The introduction of Nvidia’s proprietary interconnect system allows seamless data transfer between its chips, enhancing performance and discouraging customers from using mixed chip sets in AI applications. Currently, Nvidia holds approximately 90% of the GPU market share within data centers.
Valuation and Future Prospects
Despite its incredible growth, Nvidia’s stock is currently trading at a relatively attractive valuation. It has a forward price-to-earnings (P/E) ratio below 24 times established 2026 estimates and a price/earnings-to-growth (PEG) ratio of less than 0.7. Generally, a PEG ratio below 1 is considered indicative of undervaluation.
With ongoing growth prospects and favorable valuation metrics, Nvidia presents a sound investment opportunity as we approach 2026. Investors looking to capitalize on the AI boom may find Nvidia to be an invaluable addition to their portfolios.
