Unlock stock picks and a broker-level newsfeed that powers Wall Street.
Ryan Vanzo, The Motley Fool
4 min read
In This Article:
Across the board, AI stocks had a difficult 2025. Some companies have lost hundreds of billions of dollars in value over the first three months of the year.
But in the long term, the AI revolution looks stronger than ever. A decade from now, or even just a handful of years from now, demand for AI services will be considerably higher. And that makes Nvidia (NASDAQ: NVDA) a promising AI stock and a strong buy.
When it comes to AI stocks, Nvidia is king. If you have monitored the space at all, you’re likely very familiar with the company’s growth prospects.
Nearly every AI technology relies on heavy training and distributed computing power to function. The components that make this possible are called graphics processing units (GPUs). And when it comes to GPUs for AI technologies, Nvidia dominates with a market share of at least 70%. In areas like data centers — crucial infrastructure that makes the AI revolution possible — its market share is even higher.
By betting on its stock, you’re essentially exposing your portfolio to ground zero of the AI industry. In order for AI to continue advancing, the industry will continue to rely on the company’s chips.
Despite their higher price point, Nvidia chips are simply far superior to anything the competition has to offer. A lot of this has to do with Nvidia’s early investment in the space. But it also stems from the 2006 introduction of CUDA, the company’s proprietary parallel computing platform that allows developers to fine-tune its chips for specific tasks. This not only created performance benefits over time, but also customer lock-in.
As developers used CUDA more, customizing their environments to adapt to its potential benefits, their own products and services became entrenched into Nvidia’s ecosystem, creating a level of stickiness that keeps customers coming back for its chips each year.
Despite a historic rise in recent years, Nvidia shares have experienced a rare drop so far in 2025, falling by nearly 20%. Could this be your chance to buy into this long-term AI superstar at a discount?
It is incredibly difficult to value a stock like Nvidia. Sales are growing by leaps and bounds, but most of its growth is likely still ahead of it.
And what exactly the AI industry will look like a decade from now — nonetheless how large it will get or how quickly that growth will transpire — is largely anyone’s guess. But we can glean some clues by comparing Nvidia with another large chipmaker with AI aspirations: Advanced Micro Devices, colloquially referred to as AMD.