3 Reasons to Buy Nvidia Stock in June

It's not easy being on top. Nvidia (NASDAQ: NVDA) has certainly done well as the world's leading artificial intelligence (AI) play. It's a 12-bagger over the past five years. It's beaten the market over the past year, rising 57%. However, its 14% climb so far in 2026 is just marginally ahead of the market averages.

Adding insult to injury, several companies providing memory and infrastructure solutions for the AI revolution have doubled, tripled, and -- in some cases -- even done better than that. Why are the coattails moving faster than the coat wearer itself? Nvidia has the potential to get back on track as a market leader next month. Let's get into some of the reasons to buy this iconic growth stock in June.

Image source: Getty Images.

1. Nvidia's growth story keeps getting better

You didn't miss Nvidia's pop after posting blowout financial results last week. It didn't happen. The fiscal first quarter was great. Revenue rose 85% to $81.6 billion, accelerating to its strongest year-over-year growth in more than a year. Adjusted earnings soared 139% to $45.5 billion.

You're probably gawking at the growth, which exceeded expectations on both ends of the income statement. Maybe you're drawn to the art of dividing $45.5 billion into $81.6 billion to arrive at the jaw-dropping 55.7% adjusted net margin. I noticed. You noticed. The market didn't care. Nvidia stock has declined 5% in the four trading days since that strong financial report. In my experience, if the market doesn't reward excellence right away, it eventually course-corrects.

2. Business is booming with China tied behind its back

Nvidia is delivering stunning growth, and it's not even at full strength. Supply constraints and tariff hurdles are holding it back from growing even faster -- and so are the trade restrictions in China. This used to be Nvidia's biggest market outside the U.S., until trade tensions boiled over more than a year ago.

Revenue just soared 85% for the world's largest company, and it did so with pent-up demand percolating in the world's second-largest economy. China has turned internally to power its AI boom, but there was a reason why Nvidia was the platform of choice before the standoff intensified to the point of trade restrictions. If -- and more likely, when -- the coast clears, Nvidia will fare even better as it makes up for lost time in China.

3. Nvidia is cheaper than you think

What's the most interesting thing about Nvidia stock moving lower as the fundamentals move higher? I'll tell you. It's the opportunity.

Let's go back a week. Just as Nvidia was preparing to announce fresh financials, analysts were targeting per-share adjusted earnings of $8.38 this fiscal year and $11.63 next year. Today, those targets have been raised to $8.94 and $12.66, respectively.

In short, the stock is a lot more than just 5% cheaper now than it was a week ago. You can buy Nvidia for a reasonable P/S ratio of 24, based on what analysts see it earning for the current fiscal year, which ends in late January. It's trading for only 17 times next year's target. Nvidia competitors are growing at a slower pace, yet trading at higher valuations. It doesn't make sense.

Why do you think Nvidia's board authorized an $80 billion share repurchase program and a 25-fold increase in its quarterly dividend last week? It's not just about returning money to its shareholders. It thinks the stock is cheap enough to back up its high-margin truck. If growth investors aren't paying attention, why not appeal to value and income investors?

Can you imagine that? The next great dividend-paying value stock growing its business at an 85% clip? You can laugh about that if you'd like. If I'm right about Nvidia, you would be laughing all the way to the bank.

Rick Munarriz has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.