If I Could Only Buy 1 Artificial Intelligence (AI) Stock, This Would Be It

There's a whole host of artificial intelligence (AI) stocks on the market right now, ranging from companies that are all-in on AI to those that are only loosely tied to it. There are also more notable names coming soon. Anthropic -- the developer of the Claude large language model (LLM) and OpenAI -- the developer of ChatGPT -- will likely go public before 2026 is over.

However, regardless of how those IPOs pan out, if I could only own one AI stock, the one I'd pick is Nvidia (NASDAQ: NVDA). It's been the go-to AI investment since the AI arms race began in 2023, and I think now is as good a time as ever to buy it. Why? Because Wall Street and the market aren't giving the company much credit for what's coming over the next few years.

Image source: The Motley Fool.

Nvidia is primed to cash in on major growth

Nvidia's graphics processing units (GPUs) have been the go-to computing units in the AI industry since the beginning of the AI megatrend.

While it has competitors making both GPUs and custom AI chips, Nvidia has established a reputation for delivering high-performing products, and its widely used CUDA platform has helped it hold its position as a nearly universal AI computing platform. Its wide moat should keep it at the top of the AI computing unit leaderboard, and beyond that, Nvidia's latest forecasts make the stock look like a screaming buy.

During Nvidia's Q2 earnings call, CFO Collette Kress made a major announcement: Nvidia expects 70% revenue growth during its fiscal 2028, which will end in January 2028. Wall Street analysts had been forecasting a far slower growth rate. Nvidia noted that demand for its hardware still outstrips supply, and with the top five AI hyperscalers projected to spend $1.3 trillion on data center capital expenditures next year, those giants continue to drive the chipmaker's growth.

Additionally, Nvidia has long projected that annual AI spending on data centers will reach $3 trillion to $4 trillion by 2030. With the hyperscalers boosting their outlays each year, I think this is becoming a reasonable projection.

Yet the market isn't treating Nvidia's stock like it expects those forecasts to pan out.

None of this growth is priced into Nvidia's stock

Nvidia currently trades at 24 times forward earnings, which is a pretty cheap valuation considering the company's projected growth.

NVDA PE Ratio (Forward) data by YCharts.

If Nvidia's stock price remains flat through the end of its fiscal year and it meets Wall Street guidance, it will trade at 24 times trailing earnings. For reference, the S&P 500 (SNPINDEX: ^GSPC) trades for 24.8 times trailing earnings.

Being able to buy a stock whose revenue is projected to grow at a 70% pace for a market-average price tag is a screaming deal. Moreover, because the expected gains aren't priced in yet, it's likely that the stock's movements next year will be tied to the company's revenue growth -- indicating at least 70% potential upside in Nvidia's stock over the next year.

Very few companies can offer that level of upside in a short time frame, but what happens if Nvidia's stock is still carrying a market-average earnings multiple at the end of 2027? Some of Nvidia's competitors-- among them, Broadcom (NASDAQ: AVGO) -- have already been talking publicly about the level of demand they're expecting in 2028.

Broadcom designs custom AI chips that compete with Nvidia's GPUs. The company offered guidance that its AI semiconductor revenue would double in 2027 and double again in 2028. If Nvidia can at least keep the 70% growth rate in calendar 2028 to continue at about the same pace as Broadcom, it will be an incredible multiyear investment.

There are no other stocks that combine growth potential and a cheap valuation like Nvidia. This makes it the top AI stock to buy right now.

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