If you look at lists discussing the top artificial intelligence (AI) stocks for 2026, you'll likely find a theme: Nvidia (NVDA +0.81%) is included, or it's specifically talked about not being included. That's because Nvidia has been one of the best-performing stocks over the past few years, and is the poster child of the AI buildout.
However, 2025 wasn't as impressive for Nvidia as it was for other AI stocks, as it has risen around 35% so far this year. While that outperforms the broader market, the pace is slower than other stocks that have doubled this year.
So, is Nvidia a great stock to own for 2026? Or are its best days behind it?
Image source: Getty Images.
Nvidia is sold out of cloud GPUs
Nvidia makes graphics processing units (GPUs) and the technology that supports their use. Originally, these devices were intended to process gaming graphics, but they eventually found use cases in engineering simulation, drug discovery, and cryptocurrency mining.
Essentially, if there is a workload that requires a ton of computing power, GPUs are the device to get it done. When humanity's biggest computing workload arrived on the scene, GPUs were deployed in massive quantities to train the best artificial intelligence model possible.
That race is still ongoing, and Nvidia's GPU sales are off the charts. CEO Jensen Huang noted that the company was "sold out" of cloud GPUs, showcasing its impressive dominance in this industry. In the third quarter FY 2026 (ended Oct. 26), Nvidia's revenue rose 62% year over year to $57 billion.
Of that $57 billion, $51.2 billion came from its data center division, which includes the GPUs and supporting products used in AI model training and inference. That segment was up 66% from last year, showcasing that it's Nvidia's best segment yet.
NASDAQ: NVDA
Key Data Points
While some fear that an AI bubble is forming, Nvidia being sold out of GPUs doesn't support that narrative. The reality is that demand for computing power far outpaces supply. Nvidia's chips are among the hottest commodities in the world right now, and this allows Nvidia to maintain its premium price tag on its devices.
Demand for AI computing hardware is not going to slow, either. Nvidia forecasts that the global data center capital expenditures will rise to $3 trillion to $4 trillion by 2030, up from $600 billion in 2025. That's huge growth in five years, and would result in even greater returns for Nvidia's stock.
As a result, I think that 2026 could be another impressive year for Nvidia, but what kind of returns can investors expect?
Nvidia's stock should easily outperform the market in 2026
Wall Street analysts expect Nvidia's revenue to rise 48% in FY 2027 (ending January 2027). If Nvidia can maintain its profit margins, which it should due to its lack of GPU supply, that could turn directly into stock performance, as long as its valuation is reasonable.
Nvidia's stock trades for 39 times forward earnings, which is far cheaper than where it was at this time last year.
NVDA PE Ratio (Forward) data by YCharts
While 39 times forward earnings isn't necessarily cheap, it's not expensive for its growth rate, either. I think this is a reasonable price tag for Nvidia's stock and will allow it to convert nearly all of its growth to stock price appreciation.
Should Nvidia rise 40% or greater next year, it will be among the best-performing stocks in the market for a fourth consecutive year. However, I'm sure there will be another obscure stock that will outrun it in the AI investing realm. However, the risk on some of those stocks is far greater than that of Nvidia.
Buying shares of Nvidia now and holding for the long term is about the easiest money investors are going to make. As a result, I think Nvidia is a top AI stock to buy in 2026.
