It’s been a little over two and a half years since OpenAI dropped ChatGPT on the world, a moment that forever changed the conversation around artificial intelligence (AI). Since then, no topic has burned hotter in markets and the economy. Everyone is finally grasping just how utterly revolutionary this technology could be, sparking an insatiable demand for AI services and, critically, the infrastructure to power them. No single company has ridden this seismic wave more successfully than Nvidia (NASDAQ: NVDA), whose shares have seen an impressive 1,420% surge in the past five years. So, with its stock performing like a monster winner, the burning question for investors remains: is Nvidia stock a buy now?
Continuing an Unbelievable Run
Nvidia just keeps delivering, quarter after quarter. Their recent financial results once again gave the market ample reason to cheer. The company generated a staggering $44.1 billion in revenue during the first quarter of 2026 (ended April 27), marking an incredible 69% increase year over year. This top-line figure not only showcased exceptional growth but also comfortably exceeded Wall Street analyst expectations. The driving force behind this colossal performance? Nvidia’s thriving data center segment, which now accounts for almost 90% of its total sales.
Profitability at Nvidia remains nothing short of phenomenal, boasting a net income margin of 43%. Adjusted earnings per share came in at $0.96 for the first quarter, once again beating Wall Street analyst estimates. This consistent, monster success has clearly allowed the business to build a formidable wide economic moat, robustly protecting its competitive standing in the market. Several factors contribute to this impregnable position. First, the company possesses unmatched intangible assets in the intricate design of its GPUs, as well as its proprietary CUDA software platform. Nvidia has cultivated technological know-how that consistently keeps it far ahead of the competition, particularly in these two critical areas. Additionally, switching costs for its customers are significant. Developers who become deeply familiar with Nvidia’s hardware, software, services, and other AI tools are simply unlikely to change what they use, further solidifying its industry position.
Understanding the Risks
With Nvidia consistently reporting such incredible financial performance quarter after quarter, it might seem difficult for even the most cautious investor to find any faults. However, it’s crucial to take a step back and truly identify key risks that could impact this seemingly unstoppable giant.
One area that demands attention is Nvidia’s high customer concentration. So-called “hyperscalers” – the colossal tech giants running cloud services – represent a large chunk of revenue. While these are valuable customers, any business thrives on a diverse group of clients to reduce their negotiating leverage and mitigate risk if one customer decides to pull back. Adding to this specific risk is the undeniable fact that these very tech giants are working on developing their own chips, which might one day allow them to depend less and less on Nvidia’s offerings.
Trade tensions between the U.S. and China are also something investors need to pay close attention to. Export restrictions are directly hurting the chipmaker’s sales, so much so that Nvidia recorded a $4.5 billion charge in the first quarter due to excess inventory. While uncertainty definitely remains, it’s a testament to Nvidia’s inherent strength that its growth is still superb despite these headwinds.
Finally, the possibility of an economic downturn – a scenario many still fear is a real near-term possibility – could significantly crush demand for its GPUs. Spending on technology broadly, and AI specifically, has become such a massive part of the global economy that any notable macro weakness could lead to pervasive pessimism from executives. In such a scenario, they could decide to dramatically cut planned spending until economic conditions improve. It’s important not to ignore these risks, even if Nvidia’s ongoing momentum currently alleviates many of these concerns.
Gaining AI Exposure in Your Portfolio
Anytime a truly revolutionary new technology emerges, investors should approach things with a healthy dose of skepticism. There’s always an initial period of intense excitement, leading to a “bullish fever” that often results in expensive valuations. Moreover, it’s almost impossible to predict how these new technologies will ultimately play out in the long run.
However, as more time passes since the advent of AI, it’s becoming increasingly clear that its staying power is immense. It seems every company is actively incorporating it in some way, gargantuan sums of capital are flowing into the space, and new developments are being introduced at an astonishing pace. While no one has a crystal ball for its ultimate long-term societal impact, the takeaway is clear: gaining AI exposure in your portfolio is probably a smart idea. With Nvidia shares trading at what appears to be a reasonable forward price-to-earnings ratio of 31.6, this stock looks like a solid buy right now for those looking to capitalize on the ongoing AI revolution.
