Is Nvidia Stock a Buy?

Few companies have ever defined a technology shift the way Nvidia (NVDA +0.15%) has defined the rise of artificial intelligence (AI). Its chips sit at the center of nearly every major AI project, and the stock has been one of the market's best performers over the past few years. A run like that keeps one question permanently in the air: at nearly $5 trillion in market value, is there still room for the stock to climb? There is a great contrast between Nvidia's business momentum and the stock's recent performance. The chipmaker reported another quarter of accelerating growth last month, yet the growth stock sits about 13% below its all-time high and has gone largely sideways for months, even as the broader market climbed. Is this a buying opportunity? Image source: Getty Images. Demand keeps accelerating Nvidia's fiscal first quarter of 2027 (the period ended April 26, 2026) was, by almost any measure, a standout. Revenue rose 85% year over year to $81.6 billion -- faster than the 73% growth of the prior quarter and the 62% before it, an unusual acceleration for a company this large. Behind that figure is the data center business, where Nvidia's AI chips live. Data center revenue jumped 92% year over year to $75.2 billion, more than 90% of the company's total sales. And management sounds confident the demand will hold. On the company's fiscal first-quarter earnings call, it pointed to about $1 trillion of revenue from its current Blackwell and next-generation Rubin chips between 2025 and the end of 2027 -- up from about $500 billion a year earlier. Guidance backs this up. Nvidia expects fiscal second-quarter revenue of about $91 billion, and that outlook assumes no data center compute revenue from China. "Demand has gone parabolic. The reason is simple. Agentic AI has arrived," said Nvidia founder and CEO Jensen Huang during the company's fiscal first-quarter earnings call. Those sales also carry remarkable margins. Nvidia's gross margin sat near 75% last quarter, and the company returned about $20 billion to shareholders while authorizing another $80 billion in share repurchases. And much of its hardware runs on Nvidia's own software, which developers have spent years building around -- making the company hard to replace even when rivals match its chips. Today's Change(0.15%) $0.30Current Price$205.18 What could go wrong But even a great business can turn into a mediocre investment if too much optimism is already baked into the price. So is Nvidia's valuation reasonable? Nvidia trades at a price-to-earnings ratio of about 31 -- a premium to the broader market, though hardly extreme for a company growing this fast. But there are risks that help explain the stock's seemingly conservative valuation. China is one overhang. The country once made up at least a fifth of Nvidia's data center revenue, and management's outlook now assumes zero revenue from the important market -- a reminder of how quickly geopolitics can close off a major market. Then there's the awkward fact that some of Nvidia's biggest customers are also its potential rivals. The large cloud providers buying its chips are designing their own at the same time, and if enough of them build future systems without Nvidia's hardware inside, Nvidia's pricing power could weaken over time. And pureplay chip competitors like AMD (AMD +4.91%) are pressing with their own AI accelerators, too. So, is Nvidia stock a buy? For investors with a long-term time horizon, I think the stock looks attractive here. The business is exceptional, and the valuation looks attractive relative to the company's recent growth. Still, there are some serious risks. So, keeping any position in the stock small is probably a good idea.