Artificial intelligence (AI) is in the early stages of a massive, long-term investment curve, as evidenced by Nvidia's (NVDA +0.44%) latest financial results, released last week. Investors who patiently hold shares of competitively positioned AI leaders with exceptional growth prospects could earn generational wealth over the next 20 years.
Here's why Nvidia checks these boxes.
Image source: Getty Images.
Why buy Nvidia stock?
Nvidia continues to report stellar growth for a stock currently trading at less than 25 times next year's earnings estimate. Revenue increased 62% year over year, with 90% of the growth driven by sales to data centers. This level of growth has been routine for Nvidia over the last three years, which has sent the stock soaring.
NASDAQ: NVDA
Key Data Points
Spending on AI infrastructure is expected to reach the trillions by 2030. There's competition from companies supplying custom AI processors that are more affordable. Still, one crucial reason Nvidia will remain the preferred chip supplier for data centers is that it is shortening the time it takes to launch new chip generations. This faster innovation cycle will keep Nvidia on the cutting edge of chip technology.
Analysts currently project earnings per share to grow at an annualized rate of 36% over the next several years. The stock is up 38% year to date and trades at just 24 times next year's consensus earnings estimate. It's a no-brainer to buy and hold this AI stock for the long term.
