Nvidia has been a top performer over the past few years, and its future looks bright due to three key factors. Here’s why Nvidia is a must-buy for long-term investors.
Artificial intelligence (AI) infrastructure spending is expected to continue growing, with major tech companies and AI startups in the US needing more computing power and GPUs to train advanced AI models. Nvidia’s graphics processing units (GPUs) are at the heart of this growth, benefiting from increased demand. For example, Meta Platforms uses 10 times more GPUs for its Llama 4 model compared to Llama 3, while Elon Musk-backed xAI ramped up GPUs from 20,000 to 200,000 for its Grok 2 training.
The big three cloud computing companies – Amazon, Microsoft, and Alphabet – plan to spend over $250 billion on AI infrastructure this year, mostly on GPUs. Meanwhile, Meta Platforms aims to boost its growth capex to between $60 billion and $65 billion. A consortium of Japanese companies pledged to spend $500 billion on AI infrastructure in the US.
Nvidia’s dominant market position in GPUs is another key factor driving its success. The company has a wide moat due to its CUDA software platform, which was developed in 2006 to allow developers to program chips for other tasks beyond graphics rendering. Nvidia expanded this lead through CUDA X, and its GPUs are now the standard platform for AI and high-performance computing.
The company’s valuation is also attractive, with a forward price-to-earnings (P/E) ratio of 25 times 2025 analysts’ estimates and a price/earnings-to-growth (PEG) of 0.5. This makes it an undervalued growth stock, with revenue growth expected to double for the second year in a row. Analysts forecast further growth of 50% in fiscal 2026 and 20% in fiscal 2027.
Source: https://www.fool.com/investing/2025/02/22/3-reasons-nvidia-is-a-must-buy-for-long-term-inves