After falling into correction territory in March, the Nasdaq index has come roaring back to hit all-time highs. However, don’t expect this momentum to stop. The spending on artificial intelligence (AI) infrastructure is just massive, expected to reach over $700 billion this year. To put that into context, that is more than the gross domestic product (GDP) of all but two dozen countries last year.
Image source: Getty Images.
However, AI still appears to be in the early innings. Many of the largest tech companies have expressed that AI is a once-in-a-generation opportunity and that winning the AI race is their priority. They show no signs of letting up on data center spending, noting they are getting strong returns on their investments. This should lead to strong continued spending much longer than many investors are expecting and help power the Nasdaq to new highs through this year and into next.
Invest in the market leader
Now there are a lot of ways to try to play this trend. However, sometimes the simplest one is the best one. Nvidia (NVDA 1.33%) has been the AI infrastructure king, and the stock still looks like one of the best ways to invest in AI.
Today’s Change
(-1.33%) $-2.84
Current Price
$210.33
Key Data Points
Market Cap
$5.2T
Day’s Range
$209.73 – $212.73
52wk Range
$104.08 – $216.82
Volume
839K
Avg Vol
176M
Gross Margin
71.07%
Dividend Yield
0.02%
Nvidia did a great job positioning itself for AI way before the technology went mainstream. After developing its CUDA software platform that allowed developers to easily program its chips for tasks outside their original purpose of speeding up graphics rendering in video games, it smartly seeded CUDA into universities and research labs that were doing the early work on AI. This led to most original foundation AI code being written in its software and optimized for its chips, which is why its graphics processing units (GPUs) have become the backbone for AI model training.
However, Nvidia is much more than just GPUs. The company has one of the top data center networking businesses, which has been its fastest-growing segment. Meanwhile, it’s also positioned itself well for inference by going out and “acquiring” Groq and its language processing unit (LPU) chip technology and incorporating it into its CUDA ecosystem. Nvidia has also developed its own high-performance central processing units (CPUs), which look like they could become the next big AI infrastructure driver. Between its LPUs, Vera CPUs, and other chips and networking components, Nvidia can now offer customers complete out-of-the-box rack solutions designed for specific AI tasks, like training, inference, and agentic AI.
This means that Nvidia is not set to abdicate its throne anytime soon, and with the stock trading at a forward price-to-earnings ratio of under 26 times this year’s analyst estimates and 19 times next year, it’s one of the best AI stocks to own as the Nasdaq continues to march to new highs.
Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
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