It's not every day you get the opportunity to invest in a company with a stellar record of growth at a reasonable valuation. Nvidia (NVDA 0.62%) reported a 67% year-over-year increase in earnings per share in its fiscal 2026 third quarter, but its stock trades at just 24.5 times next year's earnings estimate. Compare that to the S&P 500, which trades at 22.2 times forward earnings.
That modest premium makes Nvidia perhaps the best stock with which to invest in artificial intelligence (AI) heading into the new year. Here's why Nvidia can be the gift that keeps on giving.
Image source: Getty Images.
Nvidia is the AI leader
Nvidia continues to experience insatiable demand for its high-performance graphics processing units (GPUs) for data centers. Management expects revenue of around $65 billion for the fiscal 2026 fourth quarter, representing a 14% increase from last quarter and 65% growth year over year.
NASDAQ: NVDA
Key Data Points
Assuming Nvidia meets that guidance, it would enter calendar 2026 with annualized revenue of approximately $260 billion. Its top customers, including Alphabet, Microsoft, xAI, and Meta Platforms, are already lining up to spend billions on Nvidia's next-generation Rubin chips, which are slated for release next year.
The company does face risks, including increasing competition in the AI chip market. However, Nvidia's quarterly results continue to show why it's the undisputed leader in this industry. Analysts currently expect the company's revenue to grow 48% next year, reaching approximately $316 billion. With such a compelling combination of valuation and growth, Nvidia is one of the best stocks to ride the AI boom heading into 2026.
