If you’re looking for an investment that can beat the S&P 500 (^GSPC +0.29%), you don’t have to find a needle in a haystack. Despite being the world’s largest publicly traded company, Nvidia (NVDA 0.48%) is still one of the smartest growth stocks to buy. Intense artificial intelligence (AI) demand, top-tier chips, and customers with deep pockets make Nvidia compelling even after years of extraordinary gains.
Here’s why investors with $1,000 to put to work in their portfolios should consider putting it into the chip giant.
Image source: Getty Images.
Nvidia provides a critical product for companies with deep pockets
Nvidia’s graphics processing units (GPUs) sit at the foundation of the AI boom. ChatGPT, humanoid robots, autonomous vehicles, and cloud computing platforms are some of the many applications that require copious volumes of high-end chips to operate effectively.
Today’s Change
(-0.48%) $-0.96
Current Price
$198.61
Key Data Points
Market Cap
$4.8T
Day’s Range
$197.13 – $202.95
52wk Range
$110.82 – $216.82
Volume
4.5M
Avg Vol
176M
Gross Margin
71.07%
Dividend Yield
0.02%
The tech companies behind these products and services also have vast budgets. Four of the top hyperscale cloud providers alone are expected to spend a combined $600 billion on AI this year, and a lot of that money will go to Nvidia’s chips.
Tech’s leading players are comfortable pouring money into their AI data center ambitions because of the technology’s vast potential — and because they don’t want to risk being left behind. That has resulted in aggressive spending from companies that have pristine balance sheets.
This isn’t exactly new, but Nvidia’s financial results truly capture the parabolic nature of AI spending. In the fourth quarter of its fiscal 2026, which ended Jan. 25, the chipmaker’s revenue surged by 73% year over year to $68.1 billion. That figure was also up by 20% sequentially.
With demand for its AI chips well in excess of supply, the company is also able to charge high prices and book substantial profits. For instance, its net profit margin hit 63% in fiscal Q4. CEO Jensen Huang hinted at an expectation for exponential growth in computing demand amid the early stage of the agentic AI era. Nvidia anticipates $78 billion in fiscal Q1 2027 revenue, which would be a 14.5% sequential improvement.
Its chief competitors aren’t even close
Nvidia isn’t the only AI chipmaker, and while there is room for many winners, it’s the clear leader. Broadcom (AVGO +0.88%) and AMD (AMD +1.64%) are two of its biggest competitors, but the gap between them and the leader is substantial.
Broadcom had sales of $63.9 billion in its fiscal 2025, while AMD brought in revenue of $34.6 billion last year. Nvidia booked more sales in its fourth quarter alone: $68.1 billion. Nvidia is also growing at a faster rate than these companies, so the gaps will continue to widen.
While Broadcom and AMD are excellent companies in their own right, Nvidia is leagues ahead of them: It delivered $215.9 billion in fiscal 2026 revenue, which was up by 65% year over year. And Nvidia has a higher net profit margin, too.
Broadcom and AMD won’t make up ground this year. In fact, Nvidia’s slice of the pie will get larger. It may be years before either grows at a faster rate than Nvidia.
The AI boom is still expanding
“Our customers are racing to invest in AI compute,” Huang said in Nvidia’s latest earnings press release. This imagery of a race paints the AI boom as a long-term trend that is in its early stages.
Data from Grand View Research supports this thesis, with the research firm projecting a 30.6% compound annual growth rate for the AI market from now through 2033.
You can hunt through the weeds for more undervalued AI stocks that most people haven’t discovered yet. However, sometimes, trying too hard to spot diamonds in the rough can leave an investor with a portfolio filled with fringe companies that underperform.
Nvidia is the largest company in the world now, so it’s not as cool a discovery as it would have been 15 years ago, when it had a $10 billion market cap. However, it can still be the smartest pick to buy with your $1,000 in investable cash today.
