The Smartest Growth Stock to Buy With $1,000 Right Now

Key Points

• The massive amount of AI-related capital spending has directly benefited this booming business.

• Investors should think about the risk a potential recessionary scenario presents.

• This soaring stock's valuation is reasonable, given its dominant position and growth trajectory.

• 10 stocks we like better than Nvidia ›

Warren Buffett might have built his empire by adopting the philosophy of value investing. However, that's not the only way to allocate capital, despite the success that it may lead to.

Some investors like to own companies that show immense potential when it comes to rapidly increasing their revenue and profits. Finding these businesses could lead to huge returns. Of course, they must have strong competitive positions that support their staying power.

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

With that being said, here's the smartest growth stock to buy with $1,000 right now.

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Lifted by the AI boom

We're in the midst of a technological revolution, one driven by artificial intelligence (AI). And there's no company that has gained more from this trend than Nvidia (NASDAQ: NVDA). It's the leading provider of data center graphics processing units (GPUs), with incredible demand that has propelled revenue nearly 600% in the past three years.

There's more where that came from. "We are at the beginning of an industrial revolution that will transform every industry," CFO Colette Kress said on the earnings call for the second quarter of fiscal year 2026. Nvidia thinks there will be $3 trillion to $4 trillion in AI infrastructure spend by 2030.

The company has some of the most powerful chips on the market. And its CUDA platform helps create the ecosystem that keeps developers locked in. The company is a dominant force in the AI race.

It's anyone's guess what the ultimate payoff will be from the massive amounts of AI investments. But that's not really Nvidia's concern, at least in the near term. All it has to continue hoping for is that its customer base remains intensely focused on building out its technical infrastructure. As a pick-and-shovel player, one that provides the critical infrastructure for the AI boom, Nvidia is the key beneficiary. It's positioned to gain from other high-growth areas as well, like robotics, autonomous driving, and enterprise AI.

Worries about a potential downturn

The ongoing AI revolution can be a double-edged sword. As mentioned, it's leading to robust demand and unbelievable revenue and earnings growth for Nvidia. This is precisely what has lifted the stock and made investors happy.

However, the huge amounts of AI-related spending are now a bigger part of the overall economy than ever before. And the trend is showing no signs of slowing down. This presents a potential risk factor: cyclicality.

You don't normally look at the tech sector and think about related companies' revenue ebbing and flowing meaningfully with the economic cycle. But we're mainly talking about hardware here, GPU orders that have long lead times and whose customers are thinking years into the future. In other words, a lot of planning and analysis must go into the decision-making process.

Imagine if the U.S. and the rest of the world enter a recession in the next six to 12 months. Confidence among corporate executives would take a hit. And in an effort to preserve their finances and conserve cash, businesses might cut back on spending plans. Again, because the dollar figures of AI capital investments are so high, this might be the first area that sees drastic reductions.

As a result, Nvidia's tremendous revenue trajectory could be derailed. The stock would likely fall, too.

Winners keep on winning

It's important for investors to understand a key risk. But that hasn't prevented Nvidia from being one of the best-performing stocks in recent memory, skyrocketing more than 30,000% in the past decade. That's a more than 300-fold rise. It's impossible to overstate how impressive this is.

But the story isn't over. In order to own the leading AI enterprise, investors are being asked to pay a price-to-earnings ratio of almost 50. That's a reasonable valuation, given the monopoly position, strong profits, and sizable expansionary runway. This makes Nvidia the smartest growth stock to buy with $1,000.

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

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.