Asking someone to pick just one stock of the thousands of publicly traded companies in the world is a daunting task. First of all, no portfolio should be built on a single company -- the best way to grow your wealth over time is with a diversified portfolio.
But every portfolio has to have a starting point, and if I were starting mine from scratch -- and choosing individual stocks instead of an exchange-traded fund -- my first draft pick would be the unquestioned leader in generative artificial intelligence (AI): Nvidia (NVDA +2.41%).
Here are three reasons why.
NASDAQ: NVDA
Key Data Points
Nvidia owns the GPU space
Nvidia's long-established growth story got a fresh boost in 2023, when the explosion in demand for generative AI had customers scooping up Nvidia's graphics processing units (GPUs) as fast as its foundry partners could make them. GPUs are parallel processing chips -- tools designed for handling specific types of complex calculations that can easily be divided up into massive numbers of smaller tasks, each of which can be dealt with simultaneously, as opposed to calculations where tasks have to be dealt with sequentially. Most of the heavy lifting in the AI realm consists of computational work that parallel processors excel at, and those chips can be combined into huge clusters to work even faster.
Nvidia has a remarkable 92% market share in the GPU market, according to estimates from Jon Peddie Research. Demand is intense for its new Blackwell chips, which are the successors to its popular Hopper chips. As CEO Jensen Huang said in the company's first-quarter earnings release:
"Global demand for Nvidia's AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. Countries around the world are recognizing AI as essential infrastructure -- just like electricity and the internet -- and Nvidia stands at the center of this profound transformation."
Its competitive position is strengthened by its CUDA software platform, which, among other things, provides libraries and tools that help developers work on AI models that are powered specifically by Nvidia GPUs. Because CUDA is only compatible with Nvidia's chips, switching to another company's chips is more complex and expensive, which should help lock Nvidia's clients in for years to come.
Image source: Getty Images
Financial performance is outstanding
Nvidia was a solid company before its 2023 run-up. Its revenue in its fiscal 2023 (which ended Jan. 29, 2023) was $26.9 billion. That's nothing to sneeze at. But compare that to its latest fiscal year (which closed on Jan. 26, 2025), when revenue was $130.5 billion. Free cash flow was $60.7 billion, giving Nvidia incredible resources to continue to scale the business.
Yes, that's right. The biggest publicly traded company in the world, with a market capitalization of $3.8 trillion, is still growing by leaps and bounds. In the first quarter of its fiscal 2026, Nvidia posted $44 billion in revenue, up 69% year over year. Net income was $18.77 billion (up 26%), and earnings per share came in at $0.76 (up 27%).
Management's guidance is for fiscal Q2 revenue to be about $45 billion, which would be up 50% year over year.
Most of the other biggest tech companies are customers of Nvidia -- Microsoft, Amazon, Alphabet, Tesla -- because they need its GPUs for their data centers. Nvidia says that it expects data center expenditures to reach $1 trillion by 2028 -- and I fully expect it to pocket the lion's share of that money.
Let's talk about Jensen Huang
Wall Street loves dynamic CEOs, and there have been plenty of them. Think of the late Steve Jobs from Apple, Meta Platforms' Mark Zuckerberg, and former Amazon CEO Jeff Bezos, just to name a few. Huang deserves to be part of that conversation, too.
He founded Nvidia more than 30 years ago as a company that built gaming GPUs, then reinvented it to provide parallel processing power for a range of other tasks. Today, it's the world's top AI engine. Huang has the vision to see where the tech world is going and the types of tools that it will need to get there -- and he has made sure that Nvidia is in a position to deliver those products. That's why Nvidia is at the center of the AI conversation today.
Nvidia is going to go as far as Huang takes it. And his leadership makes Nvidia stock more appealing.
The bottom line
Nvidia is an outlier. You rarely see companies with this kind of competitive moat, free cash flow, and earnings growth all in one package. The stock is not cheap, trading at a forward price-to-earnings ratio of 36.8. But that valuation isn't ridiculous, either, when you consider how fast the company is growing.
While it would be a mistake to hold only Nvidia in your portfolio, I think it's a slam-dunk choice to be the first stock you pick.
