With the market suddenly turning bearish on some of the best artificial intelligence (AI) stocks in the market, I decided now is the perfect time to take action and buy some shares. The company I bought most recently is fairly popular and has been a top AI pick for a long time. However, one of the greatest pieces of investing advice I've ever heard came from Peter Lynch, who noted, "Sometimes the best stock to buy is one you already own."
I agree with that philosophy, which is why I recently purchased Nvidia (NVDA 1.55%) stock before earnings. While I may be somewhat disappointed that Nvidia's stock didn't soar following earnings, and could have gotten it for cheaper if I waited, I'm confident in its long-term prospects and believe it's still a great buy today.
Image source: Getty Images.
AI spending isn't slowing down
The biggest reason some of the big tech stocks are down alongside Nvidia is the market's growing skepticism of AI spending. The big four hyperscalers alone are slated to spend about $650 billion on capital expenditures this year, with the vast majority of that going toward AI aspirations. There has been a ton of innovation with AI over recent months, and it doesn't look to be slowing down anytime soon. However, what's missing are the massive revenue streams needed to justify this spending, and that's what has the market concerned. If there is no real return on investment, why are they spending so much? The reality is, none of these companies can afford to be left behind. If they choose not to invest in AI, and it turns out to be the real deal, it will be nearly impossible to catch up, obsoleting their business in just a handful of years. So each of them chooses to continue spending.
Nvidia receives a huge cut of that spending for its graphics processing units (GPUs), so if the hyperscalers decreased their AI spending, its business would be harmed. But the reality is, nobody is slowing down; they're speeding up. This is showcased by Nvidia's latest quarterly results, where its revenue growth actually accelerated from the previous two quarters.
NVDA Revenue (Quarterly YoY Growth) data by YCharts
Considering Nvidia generated $68.1 billion in revenue during Q4 of fiscal year 2026 (ending Jan. 25), this growth rate is nearly unbelievable. It also gives me confidence that Nvidia is still going strong and the AI surge shows no signs of weakening.
While the market may want more tempered spending, Nvidia forecasts global data center capital expenditures of $3 trillion to $4 trillion by 2030. That's a far cry from where we're at now, and Nvidia will make shareholders a ton of money along the way if its vision of what the future holds pans out.
NASDAQ: NVDA
Key Data Points
It's also a screaming deal.
Nvidia's valuation is polarizing
There's a huge debate around Nvidia's stock: Should you use trailing earnings or forward earnings?
Trailing earnings are far more concrete, as they measure where the business has already been. However, you lose the forward-looking aspect of the market, which is a big deal when a company is growing as fast as Nvidia. On the flip side, there's no guarantee that Nvidia will achieve the analysts' goals that set the stage for forward earnings valuation. Each of these metrics has its flaws; the question is, Which do you believe more accurately portrays Nvidia as an investment?
NVDA PE Ratio data by YCharts
To me, valuing Nvidia on forward earnings makes the most sense because I believe that the AI build-out will be a multiyear opportunity and Nvidia has plenty of growth left in the tank. As a result, it looks like a screaming buy at these levels, and investors should consider adding more to their portfolios.
