Investing in Nvidia Below $150: A Smart Move for AI Portfolios

Nvidia (NASDAQ: NVDA) has been a market superstar in recent years, but its journey has not been easy. The stock fell below $100 earlier this year due to concerns about U.S. export controls on AI chips for the Chinese market, a U.S. plan to set tariffs on imports, and worries about technology spending. However, in recent weeks, the stock has rebounded, erasing losses for the year and showing signs of renewed momentum. It's now just a few dollars away from $150. Nvidia's decision to focus on the AI market before everyone else was a wise move. The company's graphics processing units (GPUs) originally served the gaming market, but more than a decade ago, Nvidia saw the potential of AI and shifted its focus. This has been a winning bet for Nvidia as data center revenue, which encompasses AI products and services, has skyrocketed in recent years. In the latest fiscal year, revenue surged in the triple digits to a record $130 billion. While Nvidia generates a significant portion of its revenue from the U.S., it's important to keep in mind that China did account for 13% of sales as recently as last year. However, even though the China situation may weigh on growth, it's unlikely to considerably slow down this AI giant. Last year, Nvidia brought in more than $61 billion in revenue from the U.S., and demand continues to grow as more and more customers seek computing power for AI inference -- an area of expertise for Nvidia's new Blackwell architecture and chip. Rivals like Advanced Micro Devices (AMD) also represent a headwind, but even with a high-performing GPU, it will be difficult for AMD to unseat Nvidia, especially since this market leader innovates on an annual basis. And considering demand ahead, there's likely plenty of room for Nvidia and a competitor like AMD to each generate major growth in this market. Should you buy Nvidia while it's below $150? Even if you buy Nvidia once it passes that level, if you hold on for the long term, you could be setting yourself up for significant gains. Nvidia makes a compelling buy now considering its current valuation -- trading at 33 times forward earnings estimates, down from more than 50 earlier in the year. While Nvidia is trading around these levels -- and under $150 -- it makes an excellent addition to your AI portfolio. Before you buy stock in Nvidia, consider that the Motley Fool Stock Advisor analyst team has identified 10 stocks they believe are the best for investors to buy now. While Nvidia wasn't one of them, investing in these 10 stocks could produce monster returns in the coming years. For example, if you invested $1,000 in Netflix when it was recommended on December 17, 2004, you'd have $660,821 today! Similarly, if you invested $1,000 in Nvidia when it was recommended on April 15, 2005, you'd have $886,880 today! The Motley Fool's Stock Advisor has a total average return of 791%, compared to 174% for the S&P 500. Don't miss out on the latest top 10 list when you join Stock Advisor.