Limiting investors to only buying one stock is difficult. It requires them to balance risk and reward, and to take a look at current market conditions to pinpoint where their convictions are. For me, I think it's fairly easy. If I were to choose only one artificial intelligence (AI) stock to buy and hold right now, it's easily Nvidia (NVDA 1.00%). Nvidia has been in the leadership position since the AI build-out began in 2023, and I have seen nothing to dispute that title over the past few months.
Nvidia is also a major value right now, and it looks like the perfect time to scoop up shares, as it could be ready to go on a major run.
Image source: Getty Images.
The AI build-out isn't slowing down
Nearly all of Nvidia's business is coming from AI-related sources. This could become a major issue if AI spending suddenly grinds to a halt, but there's really no sign of that happening. During Nvidia's conference call, management noted that AI hyperscaler capital expenditures will likely reach $1 trillion in 2027, up from the $650 billion expected in 2027. That's a significant expansion, and with some of the data center costs shifting from construction to compute, it will boost Nvidia's growth rate by more than the overall capital expenditure growth rate.
NASDAQ: NVDA
Key Data Points
That's a huge opportunity for investors to take advantage of, as right now, the market isn't pricing in much success after 2026. Right now, Nvidia trades for 24 times forward earnings. That means that if Nvidia hits analyst growth projections, at the end of its fiscal year (which ends in January 2027), it will trade at 24 times trailing earnings.
NVDA PE Ratio (Forward) data by YCharts
Nvidia has a track record of exceeding expectations, so my money is on an even lower trailing price-to-earnings ratio. Achieving a 24 or lower number times earning would require the stock price to stay flat from today to the end of the fiscal year, but that's what the forward earnings multiple metric conveys.
The S&P 500 (^GSPC +0.22%) trades for 26.5 times trailing earnings right now, so Nvidia would be priced as a market-average stock. But we already know that Nvidia will likely have another strong year in 2027 due to guidance for AI hyperscaler spending. That means the end of 2026 and into 2027 could bring strong gains as the market adjusts to Nvidia's future growth rate. That makes me bullish on the stock in the short term.
Over the long term, Nvidia expects annual capital expenditures to rise to $3 trillion to $4 trillion by 2030, leading to an even larger growth opportunity. With that kind of expansion, Nvidia is an obvious AI stock to buy and hold, as the data center build-out is just getting started.
