The Real Reason This AI Stock Could Be a Huge Winner in 2026

Nvidia (NASDAQ: NVDA) has been a massive winner for investors over the long term, for example, climbing 1,200% over the past five years. But in 2025, performance of the artificial intelligence (AI) chip giant, though still positive as the stock is heading for a 34% gain, has experienced some ups and downs. News of President Donald Trump's import tariffs, as well as export restrictions on chip sales to China, hurt the stock in the spring. And though it rebounded in the following months, in recent weeks, concern about the possibility of an AI bubble forming put new pressure on the stock.

Moving forward, though, Nvidia has what it takes to deliver significant growth in earnings and stock price gains, too. Let's check out the real reason this AI stock could be a huge winner in 2026.

Image source: Getty Images.

Nvidia's GPU dominance

First, though, let's catch up on the full Nvidia story. The company designs the fastest graphics processing units (GPUs) on the market -- these are the chips that power the training of AI and the actual application of the technology to real-world situations and problems. Nvidia entered the space early, well before AI became an investment theme, and this has helped it stay ahead of rivals -- and the company's ongoing innovation is part of this success story, too.

All of this has brought Nvidia explosive earnings growth, with annual revenue and profit climbing in the double- and triple-digits to reach record levels. And in the recent quarter, this growth continued, with Nvidia again surpassing analysts' expectations and speaking of strong demand for its Blackwell architecture and its update, Blackwell Ultra.

As mentioned, though, general concern about tariffs and economic growth, as well as the valuations of AI stocks, have weighed on investor appetite for Nvidia stock at certain moments this year. Even the company's recent blowout earnings report didn't offer the stock a lift.

An interesting prediction from Jensen Huang

Still, I'm optimistic about the tech giant in 2026, and I think the following will be the real reason for earnings and stock price gains. A few months ago, Nvidia chief Jensen Huang made an interesting prediction: He said he expects AI infrastructure spending to reach between $3 trillion and $4 trillion by the end of the decade.

Meanwhile, customers of Nvidia, such as cloud service providers Amazon and Microsoft, recently spoke of soaring demand and their plans to expand capacity. All of this points to an increase in need for the world's top-performing chips, and these are Nvidia's GPUs.

As this AI infrastructure spending story starts to unfold, Nvidia should see the results in its earnings reports -- this, along with the fact that Nvidia's valuation remains reasonable at 38x forward earnings estimates, might put Nvidia back on investors' "buy list." And all of this could make Nvidia a huge winner in 2026.

Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, 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.