This Artificial Intelligence (AI) Stock Just Hit a New High -- and It's Still a Buy

Core Viewpoint - The article emphasizes that despite Nvidia's recent stock surge and record highs, the company still presents a compelling investment opportunity due to its dominant position in the AI and GPU markets, as well as the ongoing growth potential in the AI sector [1][16]. Company Overview - Nvidia has been a significant beneficiary of the AI revolution, with its GPUs being the preferred choice for AI processing, leading to a stock price increase of 950% over the past three years [2][16]. - The company controls approximately 95% of the GPU market for machine learning, establishing itself as the gold standard in AI processing [6]. - Nvidia dominates the data center GPU market with an estimated 92% share, positioning itself well for the anticipated growth in data center spending, projected to rise from $392 billion in 2025 to nearly $1.7 trillion by 2035 [8][9]. Financial Performance - In the first quarter of fiscal 2026, Nvidia reported record revenue of $44.1 billion, a 69% year-over-year increase, with adjusted earnings per share (EPS) of $0.81, reflecting a 33% rise [11]. - The company forecasts continued robust growth, projecting record revenue of $45 billion for the second quarter of fiscal 2026, indicating a 50% growth [12]. - Despite concerns about decelerating growth rates, Nvidia's performance remains significantly ahead of competitors [10]. Valuation Metrics - Nvidia's stock is currently trading at approximately 38 times forward earnings, which, while a premium, is justified given the company's revenue growth of over 1,000% and EPS growth of 2,940% over the past five years [14]. - The price/earnings-to-growth (PEG) ratio stands at 0.66, suggesting that the stock may be undervalued [14]. Market Outlook - The generative AI market is projected to grow to $4.8 trillion by 2033, indicating substantial future opportunities for Nvidia [16]. - The article notes that while competition is expected to increase, no significant rival has emerged to challenge Nvidia's industry-leading position [15].