Nvidia: A High-Growth AI Stock with Potential for Long-Term Investors

Nvidia (NASDAQ: NVDA) has been a popular stock among investors in recent years, with shares increasing in value by roughly 1,500% since 2020. This meteoric rise has been fueled by the AI revolution, with Nvidia holding a leading market share for AI GPUs. However, despite its impressive growth, some metrics suggest that Nvidia's stock is still relatively cheap. On the surface, Nvidia's stock looks expensive with a $3.5 trillion market capitalization and a price-to-sales ratio of 24 times. However, when looking at the earnings basis, the situation changes. Shares trade at 46 times trailing earnings, but given the company's annual growth rate of over 50%, the stock trades at 33 times next year's earnings. After factoring in a few years of rapid growth, Nvidia's stock starts to look fairly cheap, especially if it can maintain annual growth rates in the high double digits. The artificial intelligence market, which is Nvidia's fastest-growing end market, is expected to grow by more than 30% annually over the next decade. Sustained high growth rates could very well be possible, making Nvidia a promising AI stock for long-term investors. However, there are some risks to be concerned about going forward. Nvidia currently has a 90% market share for GPUs designed for artificial intelligence purposes. Increased competition in the years to come could potentially slow revenue growth. Additionally, the company boasts the highest gross margins in the industry, and increased competition could hurt pricing, leading to lower profits and a disconnect between sales and earnings growth. Despite these risks, Nvidia's stock isn't nearly as expensive as it first appears. For investors willing to hold long term and amortize the upfront premium over a decade-long holding period, there's still plenty of money to be made with this promising AI stock. Before you buy stock in Nvidia, consider that the Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now. While Nvidia wasn't one of them, the 10 stocks that made the cut could produce monster returns in the coming years. For example, if you invested $1,000 in Netflix when it made this list on December 17, 2004, you'd have $660,821 today! And if you invested $1,000 in Nvidia when it made this list on April 15, 2005, you'd have $886,880! The Motley Fool's Stock Advisor has a total average return of 791%, outperforming the S&P 500 by 174%. Don't miss out on the latest top 10 list – join Stock Advisor today to see the 10 stocks that could produce monster returns in the coming years.