History Says Now Is an Excellent Time to Buy Nvidia Stock

Nvidia (NASDAQ: NVDA) stock has been the one that got away for many investors. I am also a part of this group, as I owned the stock from early 2023 to mid-2023 before selling shares. I eventually got back into Nvidia stock in late 2024 and have made a solid profit since then. This illustrates a valuable lesson: Just because you missed an initial run-up in the stock doesn't mean it's too late to buy now.

I think Nvidia could still be an excellent buy now, and some historical values back that claim up.

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Nvidia's GPUs have dominated the AI arms race

Nvidia is a company focused on graphics processing units (GPUs). It pursues all avenues that bolster its GPU dominance, including software and other infrastructure necessary to support GPUs. GPUs are a different style of computing unit, as they can process multiple calculations in parallel rather than just one. This ability gives them an edge in tasks that require high-powered computing, such as gaming graphics (their original purpose), cryptocurrency mining, engineering simulations, drug discovery, and their most important use case yet: artificial intelligence training.

The AI arms race caused Nvidia's stock to boom because every AI hyperscaler used Nvidia GPUs to train and run their models. This demand has persisted for longer than most investors thought, and it doesn't look to be slowing anytime soon.

In Q1 FY 2026 (ending April 28), Nvidia's revenue rose an impressive 69% year over year to $44 billion. That figure was impacted by the U.S. government's decision to ban the sale of H20 chips in China, which also affected Q2's guidance. Despite that headwind, Nvidia is still expected to grow revenue by 50%. So, even without China, Nvidia is still posting impressive growth.

Furthermore, Europe has largely been asleep at the wheel while China and the U.S. are in an AI arms race. However, that looks like it's changing, as Nvidia has announced that multiple AI "factories" (data centers filled with Nvidia GPUs) are under construction in Europe. This could boost Nvidia's growth, propelling it much higher over the next few years.

This vision backs up a third-party projection that Nvidia cited during its 2025 GTC event. The projection claimed that worldwide data center construction topped $400 billion in 2024 and could rise to $1 trillion by 2028. During FY 2025 (which encompasses most of 2024), Nvidia generated $115 billion from data center GPU sales. If this spending projection comes true and Nvidia maintains its market share of those capital expenditures, Nvidia's stock could have a ton of upside.

But there are also signs that Nvidia's stock is a great buy compared to historical levels.

Nvidia's stock is showing a similar pattern to 2024

2025 is shaping up to be very similar to 2024 for Nvidia's stock. During 2024, most investors were convinced that analysts were overprojecting earnings, so it traded for a relatively low forward price-to-earnings (P/E) ratio during the year's first half. Then, investors realized that this growth was real and would extend well into the following year, so the price shot up and Nvidia traded in the mid-40s forward P/E range.

NVDA PE Ratio (Forward) data by YCharts

That same thing is happening right now, as Nvidia's forward P/E ratio is starting to creep up, although it still has a ways to go before it reaches the mid-40s level.

NVDA PE Ratio (Forward) data by YCharts

If this occurs, Nvidia will give investors a solid profit from now until the end of the year. However, I think the future is still incredibly bright for Nvidia, as we haven't scratched the surface of the required computing capacity to operate in an AI-first society. This will fuel Nvidia's stock for years to come, making it an excellent buy-and-hold for the long term.

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Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.