Forget the AI Bubble and Buy Nvidia Stock for 2026: Here’s Why

Core Viewpoint - Nvidia's stock has experienced a decline of over 17% from its recent highs despite outperforming the S&P 500 Index, driven by concerns over the AI market and increased competition [1][2]. Financial Performance - Nvidia reported revenues of $57 billion in fiscal Q3 2026, marking a 62% year-over-year increase and a quarter-over-quarter increase of $10 billion, which exceeds previous quarterly revenues before the AI boom [4]. - Earnings per share (EPS) rose by 67% to $1.30 in fiscal Q3, showcasing strong growth despite challenges in the Chinese market [4]. - Management anticipates fiscal Q4 revenues to reach $65 billion at the midpoint, representing a year-over-year rise of approximately 65% [5]. Market Dynamics - There has been a realignment among AI stocks, with companies like Apple and Alphabet rebounding, while Nvidia and Meta Platforms have seen a slowdown [2]. - Concerns regarding an AI bubble and hyperscaler spending have contributed to the decline in Nvidia's stock price [6]. - Increased competition in the AI chip market from companies like AMD, Broadcom, and Amazon is impacting Nvidia's market position [6]. - Nvidia's potential loss of business in China, estimated by CEO Jensen Huang to be a $50 billion opportunity for the company this year, poses additional challenges [6].