The artificial intelligence (AI) buildout would look much different without Nvidia (NVDA 0.53%). Its graphics processing units (GPUs) have become the gold standard for training and running AI products, and major companies have been spending billions to buy and package the chips to try to get an advantage in the AI race.
Data centers bundle Nvidia chips by the thousands so they can work together to perform high-level AI tasks, which has been a huge windfall for Nvidia and its investors. CEO Jensen Huang has said the company's Blackwell chips cost $30,000 or more each -- so any company investing in AI chips is making substantial purchases.
That's helped Nvidia leapfrog other major companies to become the largest publicly traded company in the world by market capitalization. Nvidia even topped the $5 trillion mark earlier this year before pulling back -- it now has a market capitalization of more than $4.5 trillion.
Nvidia took its place as a member of the "Magnificent Seven" -- a grouping identified by Bank of America analyst Michael Hartnett as the most influential stocks in the S&P 500.
Image source: Nvidia.
This is the sixth article in a series ranking the best Magnificent Seven stocks to buy for 2026. In previous articles, I identified Apple in the No. 7 spot, Amazon as No. 6, Tesla as No. 5, Microsoft in the No. 4 spot, and Meta Platforms as No. 3. Here's why Nvidia deserves the No. 2 spot for 2026.
About Nvidia stock
We've already covered what Nvidia does. What we haven't talked about is how much money the company's making and how Nvidia's GPU sales have changed its trajectory.
In just five years, Nvidia saw incredible revenue growth of 682%. Profits have been even better, as Nvidia's net income rose by 1,580% in the last five years, and its free cash flow is up by 1,550%.
NVDA Revenue (Annual) data by YCharts
Even faced with more challenging comparable numbers, Nvidia continues to shine. Revenue in its fiscal 2026's third quarter (ended Oct. 26, 2025) was $57 billion, up 62% from a year ago. Most of those sales came from the company's data center segment, which saw $51.2 billion in revenue, up 66% from the previous year.
The company's gross margin is an impressive 73.4%, with net income of $31.91 billion, a 65% increase year over year. Earnings per share came in at $1.30, up 67% year over year.
Huang, who has predicted that the global AI infrastructure market could grow from $600 billion to $4 trillion by 2030, says Nvidia is profiting from three simultaneous shifts in computing: an evolution from CPU general-purpose computing to GPU-accelerated computing, the rise of generative AI, and growth in agentic AI systems.
"Nvidia is chosen because our singular architecture enables all three transitions and thus so [sic], for any form and modality of AI across all industries, across every phase of AI, across all of the diverse computing needs in the cloud, and also from cloud to enterprise to robots, one architecture," he said.
Nvidia says that it has had $500 billion in cumulative orders for its Blackwell and upcoming Rubin AI chips, with $150 billion worth already shipped.
Why Nvidia is No. 2
This company is doing things the right way. There's a huge opportunity in AI infrastructure, and Nvidia has massive competitive advantages. But I also think that the waters are going to get a little choppier in 2026. Companies are spending billions of dollars a year on Nvidia processors. Some of them are looking for alternatives or at least trying to create competition.
NASDAQ: NVDA
Key Data Points
Amazon, a major Nvidia customer, is now marketing its Trainium3 custom AI chip, which it claims can halve the cost of training and operating AI models compared to systems that use GPUs. Meta Platforms is also reportedly in talks with Alphabet's Google about purchasing billions of dollars' worth of Google's tensor processing units, or TPUs, to operate in its data centers.
OpenAI, the creator of ChatGPT, has signed new deals with Advanced Micro Devices and Broadcom to provide additional computing power for its popular AI models.
Nvidia currently holds an estimated 90% of data center AI market share, but that won't last forever. Its biggest customers -- many of them members of the Magnificent Seven as well -- would rather make their own chip infrastructure than continue to feed Nvidia's bottom line.
My prediction is that Nvidia will have a very good calendar 2026 year. But the stock price will lag behind its 2025 gains (around 40% year to date) as the competitive landscape begins to shift. That's why it gets the No. 2 ranking in the list of top Magnificent Seven stocks to buy for 2026.
