The nearly universal question among Nvidia (NVDA 1.59%) shareholders these days is simple: Where do we go from here? The stock's multi-year run, fueled by the dawn of artificial intelligence (AI), has been the stuff of legend. Since the start of 2023, Nvidia is up 1,190% (as of this writing).
After a rally of that magnitude, some investors are understandably skittish, concerned about the potential for a slowdown in the adoption of AI and increasing competition.
Yet evidence about the future of AI abounds, and Wall Street has reached a rare consensus regarding Nvidia.
Image source: Nvidia.
The state of AI adoption is hiding in plain sight
Investors unsure about the state of AI adoption need only look to the major cloud infrastructure providers for clues. "Big Three" cloud providers Amazon, Microsoft, and Alphabet all reported their calendar fourth-quarter results and were clear about their plans regarding AI.
Executives from each of the cloud purveyors said spending to capitalize on the AI opportunity remained a top priority, and they're putting their money where their mouth is. Each announced significant increases in capital expenditures (capex), investing heavily in the AI chips, servers, and data centers needed to expand their AI efforts. Additionally, Meta Platforms, which has leveraged its treasure trove of user data to inform its Llama AI, also plans to ramp spending to advance its AI ambitions.
NASDAQ: PLTR
Key Data Points
There's additional evidence hiding in plain sight. Just last week, AI and data mining specialist Palantir Technologies (PLTR +1.49%) delivered fourth-quarter results that "exceeded even our most ambitious expectations," according to CEO Alex Karp. Revenue grew 70% year over year, driving earnings per share (EPS) up 79%. The results were driven higher by demand for its flagship Artificial Intelligence Platform (AIP). The company's U.S. commercial revenue grew 137%, while the segment's remaining deal value (RDV) surged 145%.
Chip foundry Taiwan Semiconductor Manufacturing (TSM 4.64%), commonly called TSMC, is the leading producer of high-end AI chips. The company's results added to the growing body of evidence that demand for AI is robust. Fourth quarter revenue grew 26% year over year, while EPS climbed 35%. The company cited "robust AI-related demand" driving the strong results.
Perhaps more telling is TSMC's January sales report. The company delivered its highest monthly revenue ever. Why? You guessed it. Demand for AI.
NYSE: TSM
Key Data Points
The combination of heavy capex spending and robust results from Palantir and Taiwan Semiconductor leads to the inevitable conclusion that AI adoption continues at a brisk pace.
Wall Street is decidedly bullish
There are as many different opinions on Wall Street as there are analysts, so if they agree, it's rare. In the case of Nvidia, the bullish sentiment is nearly unanimous. Of the 63 analysts who issued an opinion in February, 94% rate the stock a buy or strong buy, and none recommended selling. It's noteworthy that Wall Street has reached a near-universal consensus.
Evercore ISI analyst Mark Lipacis is the biggest bull among his Wall Street colleagues, with an outperform (buy) rating and a $352 price target on Nvidia. For those keeping score at home, that represents potential gains of 85% for investors. The analyst says Nvidia is a "Top Pick" for 2026, given the "tectonic shift to parallel processing." He goes on to cite the company's "flexible ecosystem, which allows it to offer the lowest cost of ownership as AI models continue to evolve."
NASDAQ: NVDA
Key Data Points
Questions about growing competition have weighed on Nvidia in recent months, driving the stock down 9% from its late-October peak. That, combined with the company's robust earnings report, has compressed the stock's valuation. Nvidia now trades for less than 25 times forward earnings, an attractive multiple for a company at the heart of the AI boom.
I'd argue that's a fair price to pay for an industry leader, driven by strong secular tailwinds, and sporting an impressive track record of execution. That's why Nvidia stock is still a buy.
