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

Nvidia (NVDA) stock recently hit a new all-time high, surging 950% over three years, underpinned by its commanding position in the AI and data center GPU markets, where it holds an estimated 92% share. The company reported robust Q1 FY26 revenue of $44.1 billion, a 69% year-over-year increase, with adjusted EPS up 33%, and forecasts continued strong growth with Q2 guidance of $45 billion. Despite trading at approximately 38 times forward earnings, its 0.66 PEG ratio suggests an attractive valuation when factoring in its exceptional growth and pivotal role in the burgeoning generative AI market, projected to reach $4.8 trillion by 2033, indicating significant future runway.

Analysis

Nvidia's stock has demonstrated significant momentum, rebounding to an all-time high, driven by its entrenched leadership in the artificial intelligence sector. The company's dominance is quantified by its estimated 92% share of the data center GPU market and 95% of the machine learning GPU market, positioning it as the primary beneficiary of a data center spending boom projected to reach nearly $1.7 trillion by 2035. Financially, Nvidia reported record fiscal Q1 2026 revenue of $44.1 billion, a 69% year-over-year increase, and projects continued strength with Q2 revenue guidance of $45 billion, representing 50% growth. While this indicates a deceleration from prior triple-digit expansion, the growth remains robust. Adjusted EPS for Q1 rose 33% to $0.81, a figure suppressed by a $4.5 billion charge related to China export controls; excluding this charge, EPS growth would have been 57%. Despite a forward P/E multiple of approximately 38, the stock's valuation appears attractive when contextualized by its growth, evidenced by a Price/Earnings-to-Growth (PEG) ratio of 0.66, a metric suggesting undervaluation. This valuation is supported by the massive long-term opportunity in the generative AI market, which is forecasted to reach $4.8 trillion by 2033, and the fact that no significant competitor has yet challenged Nvidia's market-leading position.

Key Decisions for Investors

• Given Nvidia's commanding market share and strong growth trajectory, investors may view the stock as a core long-term holding for exposure to the artificial intelligence and data center expansion themes.
• Investors should look beyond the nominal P/E ratio and consider the PEG ratio of 0.66, which suggests the stock remains attractively valued relative to its powerful earnings growth potential.
• It is crucial to monitor the competitive landscape for any emerging threats to Nvidia's GPU dominance, as its near-monopoly is a key pillar of the current investment thesis.
• Note the impact of geopolitical factors, such as the $4.5 billion charge on China-specific chips, and monitor for any future regulatory or trade policy changes that could affect revenue streams.