Nvidia: The Top AI Stock to Buy Now
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 32 minutes ago
0mins
Source: Fool
- Market Leadership: Nvidia (NVDA) has maintained its leadership position since the AI build-out began in 2023, with no recent signs of losing this title, underscoring its strong competitive edge in the AI sector.
- Capital Expenditure Growth: Management projects that AI hyperscaler capital expenditures will reach $1 trillion by 2027, a significant increase from the previous estimate of $650 billion, which will boost Nvidia's growth rate beyond the overall capital expenditure growth rate.
- Valuation Appeal: Currently, Nvidia trades at a price-to-earnings ratio of 24, and if it meets analyst growth projections, it is expected to maintain this level by the end of the fiscal year 2027, indicating that the market has not fully priced in its future growth potential.
- Long-Term Growth Outlook: Nvidia anticipates annual capital expenditures rising to $3 trillion to $4 trillion by 2030, making it a standout choice for investors as the data center build-out is just beginning, presenting substantial growth opportunities.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 214.250
Low
200.00
Averages
264.97
High
352.00
Current: 214.250
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Nvidia CEO Describes AI Demand as Parabolic Growth
- Strong Earnings Report: Nvidia's fiscal Q1 2027 revenue reached $81.6 billion, an 85% year-over-year increase, reflecting robust market demand and business acceleration, particularly in its AI-driven data center segment, which saw a 92% revenue growth, laying a solid foundation for future growth.
- Significant Profit Increase: Non-GAAP earnings per share surged 140% year-over-year to $1.87, driven by revenue growth and margin expansion, indicating a substantial enhancement in the company's profitability within the AI sector, further solidifying its market leadership.
- Aggressive Capital Return: Nvidia raised its quarterly dividend from $0.01 to $0.25, a 25-fold increase, and authorized an $80 billion share repurchase plan, demonstrating strong confidence in future cash flows while returning approximately $20 billion to shareholders in the last quarter alone.
- Forward-Looking Commitments: Management anticipates about $1 trillion in revenue visibility from 2025 to 2027, with total supply commitments swelling to $145 billion, indicating a long-term bullish outlook on the AI market, despite competitive risks from customers developing their own custom chips.
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Greg Abel's Three Major Successful Investments as CEO
- Successful Oxychem Acquisition: Berkshire Hathaway's $9.7 billion acquisition of Oxychem was finalized during a downturn in the chemical industry, with an estimated 8x EBITDA for 2025, benefiting from modernization efforts and pricing power, leading to excellent first-quarter performance.
- Strategic Tokio Marine Investment: Abel's $1.8 billion purchase of a 2.5% stake in Tokio Marine, with permission to increase to 9.9%, was made at a premium of nearly twice book value, yet is expected to yield additional upside through a risk-sharing agreement, enhancing the insurance business.
- Precise Timing in Alphabet Investment: Abel tripled Berkshire's stake in Alphabet to $22.5 billion, investing approximately $11 billion in the first quarter, capitalizing on market recovery and strong AI-driven earnings, with the stock price rising about 35% since last quarter.
- AI-Driven Revenue Growth: Alphabet's cloud revenue surged 63%, with operating margins expanding from 17.8% to 32.9%, as AI integration improved search and advertising performance, resulting in a 19% increase in search revenue, indicating strong future growth potential.
See More
Nvidia: The Top AI Stock to Buy Now
- Market Leadership: Nvidia (NVDA) has maintained its leadership position since the AI build-out began in 2023, with no recent signs of losing this title, underscoring its strong competitive edge in the AI sector.
- Capital Expenditure Growth: Management projects that AI hyperscaler capital expenditures will reach $1 trillion by 2027, a significant increase from the previous estimate of $650 billion, which will boost Nvidia's growth rate beyond the overall capital expenditure growth rate.
- Valuation Appeal: Currently, Nvidia trades at a price-to-earnings ratio of 24, and if it meets analyst growth projections, it is expected to maintain this level by the end of the fiscal year 2027, indicating that the market has not fully priced in its future growth potential.
- Long-Term Growth Outlook: Nvidia anticipates annual capital expenditures rising to $3 trillion to $4 trillion by 2030, making it a standout choice for investors as the data center build-out is just beginning, presenting substantial growth opportunities.
See More
Chevron's Q1 Earnings Drop Year Over Year, Production Surges
- Earnings Decline: Chevron reported adjusted earnings of $1.41 per share for Q1, significantly down from $2.18 in the same period last year, indicating pressure on profitability despite a 6.5% rise in oil prices, raising concerns among investors regarding its financial health.
- Hedging Loss Impact: The company's hedging activities resulted in a $2.9 billion loss in Q1, which is expected to reverse in future quarters; however, this short-term hit may have distorted the perceived performance, potentially shaking investor confidence.
- Production Growth: Chevron's global production rose by 15% year-over-year, with a 24% increase in the U.S. market, driven by over one million barrels per day from the Permian Basin, demonstrating the company's ability to grow amidst geopolitical challenges and enhancing its competitive position.
- Strategic Outlook: Despite the challenges posed by the Middle East conflict, Chevron's management remains focused on long-term growth, emphasizing robust cash flow generation from the Permian Basin, indicating potential for further expansion in the future, even if immediate production increases are not prioritized.
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Broadcom Emerges as a New Giant in AI Chip Market
- Market Capitalization Milestone: Broadcom's market cap has reached approximately $2.1 trillion, surpassing Tesla by nearly $500 billion, marking it as one of the few companies to achieve this milestone, highlighting its strong position in the AI chip market.
- Significant Revenue Growth: In the fiscal first quarter of 2026, Broadcom's revenue rose 29% year-over-year to $19.3 billion, with the semiconductor solutions segment seeing a 52% increase to $12.5 billion, indicating robust demand in the AI sector.
- Cash Flow and Shareholder Returns: Broadcom generated $8.0 billion in free cash flow, representing 41% of revenue, and returned $10.9 billion to shareholders through buybacks and dividends, demonstrating its strong profitability and commitment to shareholders.
- Optimistic Future Outlook: Broadcom anticipates AI chip revenue will exceed $100 billion by 2027 and has secured manufacturing capacity, with management expressing optimism about revenue growth in the coming quarters, projecting a 47% year-over-year increase to $22 billion next quarter.
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Analysis of Nvidia's Importance in the S&P 500
- Market Share Leadership: Nvidia currently leads the GPU market for artificial intelligence with a market cap of approximately $500 billion, significantly surpassing second-place Alphabet, demonstrating its dominance in the high-performance computing chip sector.
- Evolving Competitive Landscape: Despite Nvidia's market leadership, competitors like AMD and Alphabet's TPU are emerging, indicating increased market competition, which necessitates continuous innovation from Nvidia to maintain its advantage.
- Portfolio Impact: Nvidia constitutes about 7.5% of the S&P 500, meaning fluctuations in its performance will directly affect investors' portfolios, and a slowdown in its growth could lead to a broader market decline.
- Investor Attention: Nvidia's success is crucial for global investors; although it was not included in Motley Fool's recommended stock list, ongoing monitoring of its performance remains a wise strategy for investors.
See More
Nvidia CEO Describes AI Demand as Parabolic Growth
- Strong Earnings Report: Nvidia's fiscal Q1 2027 revenue reached $81.6 billion, an 85% year-over-year increase, reflecting robust market demand and business acceleration, particularly in its AI-driven data center segment, which saw a 92% revenue growth, laying a solid foundation for future growth.
- Significant Profit Increase: Non-GAAP earnings per share surged 140% year-over-year to $1.87, driven by revenue growth and margin expansion, indicating a substantial enhancement in the company's profitability within the AI sector, further solidifying its market leadership.
- Aggressive Capital Return: Nvidia raised its quarterly dividend from $0.01 to $0.25, a 25-fold increase, and authorized an $80 billion share repurchase plan, demonstrating strong confidence in future cash flows while returning approximately $20 billion to shareholders in the last quarter alone.
- Forward-Looking Commitments: Management anticipates about $1 trillion in revenue visibility from 2025 to 2027, with total supply commitments swelling to $145 billion, indicating a long-term bullish outlook on the AI market, despite competitive risks from customers developing their own custom chips.
See More
Greg Abel's Three Major Successful Investments as CEO
- Successful Oxychem Acquisition: Berkshire Hathaway's $9.7 billion acquisition of Oxychem was finalized during a downturn in the chemical industry, with an estimated 8x EBITDA for 2025, benefiting from modernization efforts and pricing power, leading to excellent first-quarter performance.
- Strategic Tokio Marine Investment: Abel's $1.8 billion purchase of a 2.5% stake in Tokio Marine, with permission to increase to 9.9%, was made at a premium of nearly twice book value, yet is expected to yield additional upside through a risk-sharing agreement, enhancing the insurance business.
- Precise Timing in Alphabet Investment: Abel tripled Berkshire's stake in Alphabet to $22.5 billion, investing approximately $11 billion in the first quarter, capitalizing on market recovery and strong AI-driven earnings, with the stock price rising about 35% since last quarter.
- AI-Driven Revenue Growth: Alphabet's cloud revenue surged 63%, with operating margins expanding from 17.8% to 32.9%, as AI integration improved search and advertising performance, resulting in a 19% increase in search revenue, indicating strong future growth potential.
See More
Nvidia: The Top AI Stock to Buy Now
- Market Leadership: Nvidia (NVDA) has maintained its leadership position since the AI build-out began in 2023, with no recent signs of losing this title, underscoring its strong competitive edge in the AI sector.
- Capital Expenditure Growth: Management projects that AI hyperscaler capital expenditures will reach $1 trillion by 2027, a significant increase from the previous estimate of $650 billion, which will boost Nvidia's growth rate beyond the overall capital expenditure growth rate.
- Valuation Appeal: Currently, Nvidia trades at a price-to-earnings ratio of 24, and if it meets analyst growth projections, it is expected to maintain this level by the end of the fiscal year 2027, indicating that the market has not fully priced in its future growth potential.
- Long-Term Growth Outlook: Nvidia anticipates annual capital expenditures rising to $3 trillion to $4 trillion by 2030, making it a standout choice for investors as the data center build-out is just beginning, presenting substantial growth opportunities.
See More
Chevron's Q1 Earnings Drop Year Over Year, Production Surges
- Earnings Decline: Chevron reported adjusted earnings of $1.41 per share for Q1, significantly down from $2.18 in the same period last year, indicating pressure on profitability despite a 6.5% rise in oil prices, raising concerns among investors regarding its financial health.
- Hedging Loss Impact: The company's hedging activities resulted in a $2.9 billion loss in Q1, which is expected to reverse in future quarters; however, this short-term hit may have distorted the perceived performance, potentially shaking investor confidence.
- Production Growth: Chevron's global production rose by 15% year-over-year, with a 24% increase in the U.S. market, driven by over one million barrels per day from the Permian Basin, demonstrating the company's ability to grow amidst geopolitical challenges and enhancing its competitive position.
- Strategic Outlook: Despite the challenges posed by the Middle East conflict, Chevron's management remains focused on long-term growth, emphasizing robust cash flow generation from the Permian Basin, indicating potential for further expansion in the future, even if immediate production increases are not prioritized.
See More
Broadcom Emerges as a New Giant in AI Chip Market
- Market Capitalization Milestone: Broadcom's market cap has reached approximately $2.1 trillion, surpassing Tesla by nearly $500 billion, marking it as one of the few companies to achieve this milestone, highlighting its strong position in the AI chip market.
- Significant Revenue Growth: In the fiscal first quarter of 2026, Broadcom's revenue rose 29% year-over-year to $19.3 billion, with the semiconductor solutions segment seeing a 52% increase to $12.5 billion, indicating robust demand in the AI sector.
- Cash Flow and Shareholder Returns: Broadcom generated $8.0 billion in free cash flow, representing 41% of revenue, and returned $10.9 billion to shareholders through buybacks and dividends, demonstrating its strong profitability and commitment to shareholders.
- Optimistic Future Outlook: Broadcom anticipates AI chip revenue will exceed $100 billion by 2027 and has secured manufacturing capacity, with management expressing optimism about revenue growth in the coming quarters, projecting a 47% year-over-year increase to $22 billion next quarter.
See More
Analysis of Nvidia's Importance in the S&P 500
- Market Share Leadership: Nvidia currently leads the GPU market for artificial intelligence with a market cap of approximately $500 billion, significantly surpassing second-place Alphabet, demonstrating its dominance in the high-performance computing chip sector.
- Evolving Competitive Landscape: Despite Nvidia's market leadership, competitors like AMD and Alphabet's TPU are emerging, indicating increased market competition, which necessitates continuous innovation from Nvidia to maintain its advantage.
- Portfolio Impact: Nvidia constitutes about 7.5% of the S&P 500, meaning fluctuations in its performance will directly affect investors' portfolios, and a slowdown in its growth could lead to a broader market decline.
- Investor Attention: Nvidia's success is crucial for global investors; although it was not included in Motley Fool's recommended stock list, ongoing monitoring of its performance remains a wise strategy for investors.
See More
