The AI chip leader maintains a strong competitive position in providing the essential components to build next-generation data centers.
Nvidia offers an attractive valuation relative to its growth prospects.
Nvidia (NASDAQ: NVDA) has been one of the top-performing tech stocks in recent years. The shares have increased by 22,000% over the last 10 years, 1,230% in the previous five years, and 30% in the last 12 months, outpacing the Nasdaq Composite's 20% one-year return.
While there is increasing competition in the market for artificial intelligence (AI) chips, Nvidia continues to demonstrate leadership in delivering market-beating returns for investors in this bull market.
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There has been considerable media attention on advances in custom AI chips, such as Google's Tensor Processing Units (TPUs), and how these might negatively impact Nvidia's sales. However, one reason Nvidia is likely to continue dominating the market for data center chips is that it provides much more than just a chip.
Nvidia offers a full technology stack of chips, software, and networking components to build AI data centers. Nvidia's GB300 Blackwell graphics processing units (GPUs) remain the most in-demand AI chip as we enter 2026. Management stated on its recent quarterly earnings call that compute capacity in cloud data centers using Nvidia chips is fully utilized, while demand for more chips remains above expectations.
With the stock continuing to trade at a reasonable forward (one-year) price-to-earnings ratio of 24, Nvidia remains one of the best growth stocks to buy right now. Analysts expect its earnings per share to compound at an annual rate of 37% over the next several years.
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.