With up to US$4 trillion in data centre spending by 2030 expected to propel AI even further into the spotlight, to the tune of a 40 per cent compound annual growth rate, NVIDIA (NASDAQ:NVDA) finds itself in the top spot when it comes to capitalizing on this accelerating trend.
NVIDIA is the first-mover in GPU-accelerated computing, which allows for parallel data processing, a methodology exponentially quicker than conventional linear CPUs. This innovation is allowing the company to rapidly grow market share in the gaming, professional visualization, data center and automotive markets, driven by a product portfolio demonstrated to excel at AI pre-training, post-training and inference, collectively increasing data processing capabilities by more than 1 million times over the past decade.
Understandably, having since grown into the largest public company in the world at C$6.36 trillion, NVIDIA’s investor awareness is at an all-time-high from mom-and-pop retail to hedge fund managers, each keen to optimize their exposure to a historic example of tech-based value creation.
This leads us to the task of delineating reasonable expectations about what an investment in NVIDIA today can deliver into the future, attempting to set bearings for interested investors, lest they put money to work in haste. To this end, I’ve devised a broad, three-question checklist as a safeguard towards a potential investment:
- Does NVIDIA fit within your financial plan?
- Is NVIDIA creating tangible value?
- What do NVIDIA’s financials say about the company’s future?
A 3-step checklist before investing in NVIDIA
1. Does NVIDIA fit within your financial plan?
It may sound obvious, but adding an investment to your portfolio requires it to fit neatly into your financial plan. The unspoken difficulty here, as is the case with any stock that catches your fancy, is separating the excitement of hitting it big with a more realistic portrait of investing, one where you make regular contributions and take advantage of compound interest over three or four decades to fund your financial goals.
NVIDIA, as centred in the public eye as a stock can get, is catching lots of investors’ fancies at the moment, likely in the hundreds of millions, imbuing the stock and its more than 1,300 per cent return since 2020 with an aura of FOMO that makes it a prime target for a spur-of-the-moment investment.
The rational move, however, would be to analyze the stock within the framework of what you hope your investments will achieve. Here are some key points to consider:
- Your asset allocation likely specifies thresholds for US and large-capitalization stocks and your potential investment in NIVIDA should accommodate them. What does that entail about how small your investment can get before justifying another purchase or how large it can grow before you sell some off the top? Vanguard’s all-equity ETF, VEQT, currently allocates just over 45 per cent of assets in the US, based on the country’s share of global market capitalization, making the figure a good rule of thumb.
- You choose investments based on what you need the money for and not the other way around. Seeing as NVIDIA is an individual stock, and individual stocks require a medium-to-long-term time horizon to create meaningful shareholder value, are you able to sit tight for potentially a decade or more before you need the money?
- When we look at NVIDIA’s beta of 2.29, we find that the stock is 129 per cent more volatile than the broader market. In other words, if US stocks as a whole drop by 20 per cent, your NVIDIA shares would take a 45.6 per cent haircut. It’s worth thinking about how you might react to this disparity before building a position too large to handle.
Now that you have a working idea about whether or not NVIDIA has a place in your financial plan, we can get into the nitty gritty of the company’s value proposition and what its growth initiatives look like on the income statement.
2. Is NVIDIA creating tangible value?
A second question to ask as part of your investment due diligence is whether or not NVIDIA is making a positive impact on its customers, propelling the ongoing AI tailwind with newfound efficiency and cost-effectiveness. To get a handle on this, let’s think about three of NVIDIA’s highest-profile partnerships.
OpenAI
In September, NVIDIA signed a deal with OpenAI to build 10 gigawatts – millions of GPUs – of infrastructure, with the first GW expected to launch in the second half of 2026 on NVIDIA’s upcoming Vera Rubin platform, which combines the Rubin GPU (successor to NVIDIA’s Blackwell) with the Vera CPU, the company’ first custom CPU, into a leading-edge superchip designed to deliver an unprecedented US$5 billion in AI token revenue for every US$100 million invested.
The deal lays the groundwork for an up to US$100 billion investment in OpenAI, which will serve to sharpen its AI models and improve outcomes for more than 700 million weekly users, creating value across industries through incremental efficiency.
Oracle
NVIDIA’s deal with OpenAI, vying to enhance client profitability as well as user experience, was followed by a partnership with Oracle (NYSE:ORCL) in October to build the US Department of Energy’s largest AI supercomputer for the purposes of scientific discovery.
Based out of the Argonne National Laboratory in Lemont, Illinois, the system will deploy 110,000 NVIDIA Blackwell GPUs to develop new agentic scientists within the next decade, boosting public R&D capabilities, accelerating breakthroughs and reinforcing US AI leadership.
Novo Nordisk
Similar to NVIDIA’s work with Oracle, the company’s deal to advance drug discovery alongside Novo Nordisk shows the direct connection between AI innovation and the lives of everyday people.
The companies are creating customized AI models to aid in early-stage pharmaceutical development, as well as advanced-stage simulations, with programs to focus on:
- Using single-cell models to predict the effects of new drugs.
- Building molecules with drug-like properties.
- Building biomedical large language models to identify relationships between genes, proteins and diseases.
The initiative, geared towards the common good, demonstrates AI’s growing potential to improve quality of life by meeting medical needs beyond the bounds of current standards of care.
Having merely scratched the surface of how NVIDIA is benefitting its clients and the world at large – with partnerships with Hyundai, Microsoft and Palantir also worth a look – a rational follow-up question to ask centers on how the company’s lofty ambitions are showing up on its income statements and translating into shareholder value.
3. What do NVIDIA’s financials say about the company’s future?
When we look back on NVIDIA’s past five years, we find robust evidence in support of its more than 14-bagger return, substantiating how the company is capturing the lion’s share of the US$4 trillion in global AI infrastructure spending expected by the end of the decade.
NVIDIA’s revenue grew from US$26.9 billion for the fiscal year ended January 2022 to US$130 billion in fiscal 2025, justified by more than 7x net income growth from US$9.75 billion to US$72.8 billion, respectively.
From a more near-term perspective, fiscal Q2 2026 delivered sales of US$46.7 billion, up by 56 per cent year-over-year (YoY), exceeding management’s outlook of US$45 billion, thanks to strong contributions from cloud service providers, enterprises and governments, with net income of US$26.4 billion, up by 59 per cent YoY, keeping operations on track to meet full-year guidance.
NVIDIA followed this up with record revenue of US$57 billion in Q3, up 22 per cent from Q2 and 62 per cent year-over-year (YoY), supported by record data center revenue of US$51.2 billion, up 25 per cent from Q2 and 66 per cent YoY. The company paired this growth with net income of Us$31.9 billion, up from US$19.3 billion YoY, driven by what founder and chief executive officer Jensen Huang describes as “the virtuous cycle of AI,” in which “AI is going everywhere, doing everything, all at once.”
With NVIDIA guiding for a new revenue record in Q4 amid compounding demand, and a wealth of high-profile partners to benefit from synergies, the company’s growth trajectory appears to be in alignment with its bottom line, which is the ultimate arbiter of long-term stock performance.
The TL:DR on NVIDIA’s investment prospects
NVIDIA is building AI factories all over the world, fueling the learning curve of AI models that hold the potential to make life more efficient through data analysis, idea generation and 24/7 awareness that our need for sleep precludes us from partaking in.
This shift in how we process information has been rightly compared to the birth of the Internet and the industrial revolution, as AI’s ability to make our lives less repetitive and more creative, should development continue at a vertiginous pace, may lead to solving problems that seemed impossible only a few years ago.
All this is to say that, since every industry imaginable is involved in the AI revolution, and NVIDIA is at the heart of it, the stock has a tendency to overreact in line with broader sentiment, even if to exogenous news, offering attractive entry points should you decide to invest, recognizing the reasons for conviction in the fact that a 1,300 per cent return over five years may represent only a fraction of what’s to come.
Join the discussion: Find out what investors are saying about this AI stock on the NVIDIA Corp. Bullboard and make sure to explore the rest of Stockhouse’s stock forums and message boards.
Stockhouse does not provide investment advice or recommendations. All investment decisions should be made based on your own research and consultation with a registered investment professional. The issuer is solely responsible for the accuracy of the information contained herein.
For full disclaimer information, please click here.
