Nvidia (NVDA +1.68%) shareholders had their ups and downs in 2025, but -- like most of the past few years -- it was worth it by the time the ball dropped. Nvidia stock rose 39% last year, more than doubling the market's return.
Is 2026 the year that Nvidia's gravity finally meets its match? I don't think so. Let's go over some of the reasons why I believe the world's most valuable company by market cap will continue to outpace the general market returns in the year ahead.
Image source: Getty Images.
1. Revenue keeps soaring
If you're wondering why Nvidia became the first company to top $5 trillion in market cap -- albeit briefly in late October -- take out your radar gun. Revenue has been on a tear in recent years. Just check out how Nvidia's top line has shot higher through all but one of the last five years.
- Fiscal 2021: Up 53%
- Fiscal 2022: Up 61%
- Fiscal 2023: Up 0%
- Fiscal 2024: Up 126%
- Fiscal 2025: Up 114%
Nine months into fiscal 2026 -- yes, that's where we are now -- Nvidia's revenue has climbed 62%. Its guidance for the fiscal fourth quarter, which ends later this month, calls for a 65% jump. Revenue has risen by at least 53% in five of the last six years. Move the starting line up, and Nvidia's top line has soared by 61% or more in five of the last six fiscal years.
NASDAQ: NVDA
Key Data Points
2. This year is being sandbagged by trade war noise
Seeing revenue decelerate in fiscal 2026 after more than doubling in back-to-back years isn't a good look, but there's a showdown behind the slowdown. China is the world's second-largest economy. The country accounted for a healthy chunk of Nvidia's business until the U.S. rocked the world with the threat of tariffs during the chip giant's fiscal first quarter.
Trade restrictions blocked Nvidia's ability to sell its high-end artificial intelligence (AI) chips in China. The current framework of the deal to resume sales will prove costly to Nvidia. Analysts expect revenue growth to slow to 50% in fiscal 2027, but this outlook could improve dramatically if Nvidia can compete on a level playing field again.
The Motley Fool's 2026 AI Investor Outlook Report.
3. AI isn't going away
You've probably had your fill of AI chatter lately. Everyone seems to have an opinion on the topic, and it may seem that this will only end in AI fatigue or the burst of an AI bubble. Have you considered a rosier alternative?
Generative AI is making complicated tasks easier and breathing new life into even stodgy businesses. Companies aren't ramping up their AI investments because a theme is trendy. AI is the most game-changing revolution since the smartphone, and getting left behind isn't an option.
The Motley Fool's 2026 AI Investor Outlook Report -- our latest research on the bar-raising reality -- points out that 9 of 10 AI investors plan to hold or buy more AI stocks this year. It's hard to bet against the market bellwether when demand is everywhere.
4. Nvidia is still cheap
Nvidia's torrid path to becoming a 14-bagger over the past five years may lead you to believe that Nvidia's is priced at a rich premium to the market. You're right -- but also wrong. Revenue has grown 12-fold over the past five years. Net income has exploded 23-fold in that time.
The rearview mirror's reflection may seem rich. Nvidia is trading for 46 times trailing earnings. Now check the windshield for the road ahead. Nvidia is trading for less than 25 times forward earnings. That's certainly more than reasonable for a stock expected to grow at least twice that fast on both ends of the income statement.
Could Nvidia stock get even cheaper without having to move lower? Absolutely. Consider that analyst earnings per share estimates for the new fiscal year, which ends later this month, have grown from $6.36 to $7.57 over the last three months. How much higher do you think that target will be in a year? Now start asking yourself how much higher Nvidia can go in that time. If I'm right, Nvidia will outrun the market in the 2026 footrace.
