Nvidia (NASDAQ: NVDA) has been one of the best-performing stocks over the past five years, up an astonishing 2,430%. Given those gains, the question many investors ask now is whether it is too late for new investors to buy in and see above-average returns.
Let’s look at four reasons why Nvidia stock is still worth buying like there is no tomorrow.
1. It’s still early innings in the AI infrastructure buildout game
Nvidia has been a huge beneficiary of the heightened interest in artificial intelligence (AI), as its graphic processing units (GPUs) are the backbone of the computer server infrastructure used to train large language models (LLMs) and run AI inference. So far, demand for its GPUs and other chips has been insatiable as cloud computing companies and other tech juggernauts ramp up their AI-related spending, trying to stay ahead of the demand curve.
Concerns are beginning to crop up that companies might be overbuilding needed capacity, but most show no signs of slowing down their spending. In fact, management at both Meta Platforms and Alphabet says the biggest risk related to the companies’ AI-related spending is underinvesting and missing out on the huge potential opportunity.
For its part, Meta has said that training its new Llama 4 LLM will likely require almost 10 times the computing power of Llama 3. To handle that workload, it would need 160,000 GPUs compared to 16,000 for Llama 3. The newest Grok 3 LLM from xAI, meanwhile, is projected to require 100,000 GPUs, up from 20,000 used by Grok 2.
The exponential need for more computing power and GPUs as LLMs advance shows a potential very long runway of growth for Nvidia.
Image source: Getty Images.
2. Nvidia’s software unit gives it a wide competitive moat
Nvidia isn’t the only company cranking out GPUs. Advanced Micro Devices (NASDAQ: AMD) operates in this space and other companies are trying to make inroads, hoping to tap into the giant market Nvidia currently controls.
It gained that control because the company’s chips long ago became the industry standard thanks largely to its CUDA software platform. The…
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