1 Reason Wall Street Is Obsessed With Nvidia's Stock

Key Points

• Nvidia provides a lot of critical AI infrastructure that is used in data centers.

• In the second quarter, its data center revenue jumped 56% year over year.

• That segment alone represented an astounding 88% of total revenue.

• 10 stocks we like better than Nvidia ›

Few, if any, stocks have gotten as much attention over the past couple of years as Nvidia (NASDAQ: NVDA). Since the start of 2023, Nvidia's stock is up over 1,120%, far outpacing the S&P 500 index's 71% gain during that span (through Sept. 12).

The reason why Wall Street has been all over Nvidia over the past couple of years comes down to its dominance in artificial intelligence (AI) infrastructure. Its role begins with data centers, which give companies the ability to train, deploy, and scale AI as we know it today. Without them, AI wouldn't have advanced as quickly as it has in recent years. And without Nvidia, these data centers would be far less efficient.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Nvidia's main contribution is its graphics processing units (GPUs), which you can think of as the engines of data centers. When it comes to data center GPUs, Nvidia has a virtual monopoly, providing them for top companies like OpenAI, Microsoft, Amazon, Alphabet, and Meta.

Nvidia's data center business is more than GPUs, too. It also includes a full suite of hardware and software to run AI workloads. This reliance on Nvidia has been reflected in its financials. In the second quarter, the company's data center revenue increased 56% year over year to $41.1 billion (88% of total revenue), and in the past two years, its total revenue has grown by 158%.

Nvidia has a lot of long-term appeal, but if you're planning to invest today, be aware of its high valuation. There's a lot of growth already priced into Nvidia's stock, so if it fails to meet investors' lofty expectations, it could experience sharp pullbacks and high volatility (as we've seen on numerous occasions).

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $648,369!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,089,583!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 189% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 15, 2025

Stefon Walters has positions in Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.