Volatility has returned to the stock market in recent weeks, but one market sector, artificial intelligence (AI), remains a great place to find long-term opportunities for investors. Nvidia (NVDA +2.22%) is experiencing robust demand for its data center chips, yet the stock trades at just 24 times next year's earnings. This makes Nvidia an excellent stock to invest $500 in right now.
Image source: Nvidia.
An undervalued high-growth tech stock
CEO Jensen Huang stated that its graphics processing units (GPUs) used by cloud service providers in their data centers are sold out. Third-quarter 2026 data center revenue, which accounts for 90% of Nvidia's business, increased 25% over the previous quarter to $51 billion. Every primary cloud provider is buying every GPU it can. High demand helps Nvidia's margins, which saw its net profit margin tick up to 56% in the quarter.
NASDAQ: NVDA
Key Data Points
Nvidia is in the midst of a long-term transition from traditional computing, which has relied on central processing units (CPUs), to accelerated computing with more powerful GPUs. At the same time, the growing demand for AI-powered applications is piling on to the demand for these chips. These are two powerful shifts happening concurrently in computing that are creating a long runway of growth for Nvidia.
The stock's forward earnings multiple makes it a no-brainer growth stock to buy and hold. Investors are getting excellent value, setting the stage for potentially market-beating returns in 2026 and beyond. A $500 investment could turn into $1,000 or more within the next few years at the rate Nvidia is growing.
