It's been a bit of a lackluster start to 2026 for chipmaker Nvidia (NVDA +0.52%). As of Jan. 26, its shares were flat to start the year, while the S&P 500 is up around 1.6%.
This is unusual territory for a tech stock that's usually leading the rally. Investors have been pivoting to other stocks, likely out of concern that Nvidia may have gotten too expensive. At $4.5 trillion in market cap, it's easily the most valuable stock on the market right now.
Whether you think Nvidia remains a good buy may ultimately hinge on how much more growth you expect from the business in the years ahead. If a recent forecast is true, then the AI stock could still be a relatively cheap buy right now.
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There's still plenty of AI spending expected in the near future
You may have heard that AI projects aren't paying off for many companies, and that there are concerns that tech companies are spending too aggressively. While that is true, that doesn't mean spending is due to slow anytime soon. It's still the early innings of AI development, and many projects will inevitably fail, but many new ones will also begin. As companies become more familiar with and comfortable using AI, there's the possibility for more of these projects to start paying off.
According to a recent report from research firm Gartner, AI spending is expected to top $2.5 trillion this year, which is an increase of 44% from a year ago. In 2027, that number is projected to rise to $3.3 trillion, representing a further increase of around 32%.
This comes amid a "trough of disillusionment" as many companies are thinking twice about AI investments. If this is how strong the growth is when people are questioning AI investments, that's a great sign of the long-term potential growth opportunities ahead for Nvidia and other companies involved with AI development.
NASDAQ: NVDA
Key Data Points
Nvidia's business remains robust
Although Nvidia isn't doubling or tripling sales like it was during the earlier stages of AI growth, it's still doing incredibly well. When it last reported earnings in November, its growth rate was at 62%, as sales totaled $57 billion for the period ended Oct. 26, 2025. Its net income rose by an even higher rate of 65%, coming in at $31.9 billion.
Meanwhile, the stock itself doesn't look terribly priced for such high-powered growth. Nvidia's currently trading at a forward price-to-earnings multiple of less than 25, which is based on analyst projections. That's not a high price for the leading AI stock in the world. It's a good buy today, and if the report from Gartner turns out to be true, Nvidia could prove to be a steal at its current levels.
