Invest Now: Nvidia Stock Offers Strong Fundamentals and Future Growth Potential Despite Recent Growth
Nvidia's stock has been a hot topic among investors, with many wondering if it's too late to buy into the company's rapid growth. However, a closer look at the company's fundamentals and future prospects suggests that Nvidia is still a solid investment opportunity.
Firstly, Nvidia's business continues to grow at a rapid pace. In Q1 FY 2026, the company's revenue rose an impressive 69% year over year to $44 billion. This growth was partially impacted by the U.S. government's decision to ban the sale of H20 chips in China, but even without this headwind, Nvidia is expected to grow revenue by 50%. This indicates that Nvidia's growth is not solely dependent on a single factor but rather is driven by a combination of factors.
Secondly, the AI arms race has been a major driver of Nvidia's growth. Every AI hyperscaler uses Nvidia GPUs to train and run their models, and this demand has persisted for longer than most investors thought. Furthermore, Nvidia has announced that multiple AI "factories" (data centers filled with Nvidia GPUs) are under construction in Europe, which could boost Nvidia's growth even further.
Thirdly, a third-party projection cited during Nvidia's 2025 GTC event suggests that worldwide data center construction could rise to $1 trillion by 2028. If this spending projection comes true and Nvidia maintains its market share of those capital expenditures, Nvidia's stock could have a significant upside potential.
Despite its recent growth, Nvidia's stock is still trading at a discount to its historical levels. The company's forward P/E ratio is starting to creep up, but it still has a ways to go before it reaches the mid-40s level seen in 2024. This suggests that there is still room for the stock price to rise in the near term.
In addition, the future looks incredibly bright for Nvidia. The required computing capacity to operate in an AI-first society is still in its infancy, and this will fuel Nvidia's stock for years to come. As such, investing in Nvidia now could be a solid buy-and-hold strategy for the long term.
However, it's important to note that while Nvidia may be a good investment, it wasn't one of the 10 best stocks identified by the Motley Fool Stock Advisor analyst team. The 10 stocks that made the cut could produce significant returns in the coming years. This is something to consider when making your investment decision.
In conclusion, while Nvidia's stock may not be as cheap as it once was, its strong fundamentals and future prospects make it an excellent investment opportunity for those looking for long-term growth.
