Is Nvidia Stock Too Expensive to Buy Now?
Data center growth is slated to continue for some time.
Nvidia's GPUs are unrivaled in the AI space.
Many stocks trade at the same price tag as Nvidia with far less growth.
10 stocks we like better than Nvidia ›
Nvidia (NASDAQ: NVDA) has been the top artificial intelligence (AI) stock to own for some time now, but with its latest rise, many investors are concerned that Nvidia's stock is too expensive to buy more shares at the current price. While I understand the hesitation, I think there is a compelling argument that Nvidia isn't expensive when you take a longer view than just a single year.
If you can commit to owning Nvidia stock for three to five years, I think there's a good reason to buy the stock right now. However, if you're only looking at a single year, the stock may appear somewhat pricey.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Data center expansion will continue to be a massive source of growth
Nvidia is the global leader in graphics processing units (GPUs), and it has established this position through superior hardware and unmatched software that allow users to optimize GPUs for various workloads. One estimate pegs Nvidia's data center market share for GPUs at 90%, which underscores just how widely used Nvidia's products are.
GPUs aren't just popular for AI workloads; they're used whenever an arduous computing task is involved. Whether it's drug discovery, cryptocurrency mining, engineering simulations, or their original purpose, gaming graphics, GPUs excel at the task because of their ability to process multiple calculations in parallel. Combine that with the ability to connect GPUs in clusters, and their computing power can be quickly amplified.
As more data centers are built, the demand for GPUs is expected to rise, which will likely benefit Nvidia's stock over the long term. For 2025, the AI hyperscalers all announced record capital expenditures, with most of the funds going toward data center construction. While this is impressive, the records are likely to be shattered again in 2026, as data center construction spans multiple years. This supports a third-party projection that Nvidia cited during its 2025 GTC conference, stating that 2024 global data center capital expenditures totaled $400 billion but are expected to rise to $1 trillion by 2028.
Should that occur, Nvidia's stock has plenty of room to run, as it captures a large portion of that spending. In the company's fiscal-year 2025 (which encompasses most of 2024), its data center revenue totaled $115 billion, which means Nvidia captures nearly 30% of total data center spending. If it can maintain that market share, it has the potential to generate $300 billion from data centers alone, provided the projection comes true.
That's a significant upside from today's totals, making today's stock price appear less expensive than it initially seems.
Nvidia's stock appears expensive, but so do many others in the market
Currently, Nvidia's stock trades at about 40 times forward earnings.
NVDA PE Ratio (Forward) data by YCharts
That's historically quite expensive, but few companies have been able to sustainably grow as quickly as Nvidia. For Q2, Nvidia expects 50% revenue growth, which is far more than the majority of companies in the market.
Furthermore, if you're going to call Nvidia expensive, then there are countless other stocks investors must be cautious with. Stocks like Amazon (NASDAQ: AMZN) (36 times forward earnings), Eli Lilly (NYSE: LLY) (35 times forward earnings), and Costco Wholesale (NASDAQ: COST) (53 times forward earnings) are just as expensive as Nvidia, yet don't have near the growth rate or upside.
NVDA PE Ratio (Forward) data by YCharts
I think it's safe to say that the broader market is rather expensive as a whole, but with how rapidly Nvidia is growing and how bright its long-term prospects are, I think investors are still safe to pick up shares here, as long as they have the mindset that they're holding for three to five years. If you can keep that time frame in mind, Nvidia is still a compelling investment.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!*
Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 15, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
23 minutes ago
- Globe and Mail
Can Cava Become the Next Chipotle?
Key Points Cava plans to expand its store presence from less than 400 locations today to 1,000 in 2032. Bullish investors would love for the up-and-coming fast-casual concept to become as big as Chipotle. Chipotle not only has 10 times as many stores as Cava, but the Tex-Mex chain is still growing. 10 stocks we like better than Cava Group › Chipotle Mexican Grill (NYSE: CMG) brought innovation to the restaurant sector, pioneering the fast-casual dining concept and scaling it across the U.S. and beyond. The Tex-Mex chain is a leader in the industry, with strong growth and impressive profitability. Its success has spawned copycats. Cava (NYSE: CAVA) is a Mediterranean-inspired fast-casual restaurant chain that's expanding rapidly itself. But it's much smaller today. That hasn't prevented investors from asking what the business might look like down the road. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Does Cava have what it takes to one day become the next Chipotle? Here's what investors must know. Opening new stores rapidly Cava is finding success thanks to some key factors. It's betting on consumers' rising interest in healthy food choices. The Mediterranean diet is considered one of the healthiest in the world. What's more, Cava is trying to copy what has worked so well for Chipotle: The fast-casual dining concept. This combines the speed, convenience, and accessibility people appreciate with fast-food restaurants, but it does so with higher-quality ingredients. By benefiting from these two trends, Cava has seen tremendous growth. The company opened 15 net new stores in the fiscal 2025 first quarter (ended April 20), bringing the total to 382. This supported a 28.2% year-over-year gain in revenue, which was boosted by impressive same-store sales (SSS) growth of 10.8%. That figure is noteworthy because it happened during a time when consumer sentiment has been under pressure. Cava's profitability is getting better. Last fiscal quarter, the operating margin came in at 4.7%. This was a meaningful improvement from the 3.6% operating margin from the year-ago period. Looking ahead, the leadership team has plans to get to 1,000 stores by 2032. Expanding the physical footprint by about three-fold would unquestionably lead to much higher revenue and earnings down the road. Cava's biggest bulls hope this happens, and it would get the business closer to Chipotle's size. Don't question Chipotle's dominance To be clear, Chipotle is experiencing a slowdown, as people prioritize getting more value from the money they spend. The company's same-store sales dipped in each of the last two quarters, a very unusual occurrence for the industry leader. Nonetheless, Chipotle is still a top-notch performer in the restaurant market. The business has developed durable competitive advantages, thanks to its scale. Chipotle has 3,839 stores right now, and it raked in $3.1 billion in revenue in the second quarter, both numbers that are light years ahead of Cava. Chipotle has a more visible brand, and its huge sales base allows it to better leverage marketing, product, and technological investments. At its current size, it's easy to argue that Cava hasn't built an economic moat. Its brand is becoming more well-known, and as it scales, there could be some cost advantages. However, I don't see there being any strengths today. I believe there's a very low probability that Cava will get to Chipotle's store count or market cap. Chipotle isn't sitting still. It might be approaching 4,000 stores soon. But over the long term, the company wants to have 7,000 locations open in North America. I don't see Cava ever reaching that level. Chipotle plans to open 330 stores just this year, which is nearly as many as Cava has in total. Investors who are hoping that the Mediterranean chain can catch up to the purveyor of burritos and bowls must seriously temper their expectations. Chipotle has a commanding lead that Cava likely won't chip away at. Cava's valuation is also very expensive. Shares currently trade at a price-to-earnings ratio of 71.9, a whopping 78% more expensive than Chipotle. Cava isn't worthy of investment consideration. Should you invest $1,000 in Cava Group right now? Before you buy stock in Cava Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cava Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Globe and Mail
23 minutes ago
- Globe and Mail
Prediction: Quantum Computing Stock Will Be Worth This Much in 2030
Key Points Quantum Computing has emerged alongside other popular quantum stocks such as IonQ, Rigetti Computing, and D-Wave Quantum over the last year. While the company's approach to building quantum applications is interesting, past ambitions in other markets and an inconsistent financial profile should make investors pause before blindly buying the hype narrative. Although Quantum Computing has interesting potential, the amount of unknowns surrounding the company's future are hard to ignore. 10 stocks we like better than Quantum Computing › One of the more curious companies that has piqued investor intrigue in the quantum computing market is a business called (wait for it!) Quantum Computing (NASDAQ: QUBT). With a name like that, I wonder how it landed on so many radars. Sarcasm aside, Quantum Computing (the business) deserves a look -- and not just because of its 2,400% share price gains over the last year. To me, the company's technological promises and its actual business just don't align. Let's explore how Quantum Computing is attempting to disrupt the artificial intelligence (AI) realm and then dig into whether or not the company has what it takes to fulfill its lofty ambitions. Is Quantum Computing the next multibagger AI stock? Read on to find out. Quantum Computing might look like an exciting company on the surface, but... Quantum-based applications have the potential to transform the computing industry thanks to their fundamentally differentiated architectures. In simple terms, classical computing is based on binary code, written through a series of bits expressed as 1 or 0. Quantum computing uses qubits, which means they can exist as both 1 and 0 at the same time -- a process known as superposition. This allows for more complex information processing compared to today's classical computers. There are multiple ways that companies are developing qubits. IonQ relies on a process called trapped-ion, which essentially uses lasers to trap atoms and use them as the foundation of a qubit. Meanwhile, other competitors such as Rigetti Computing and D-Wave Quantum use superconducting circuits and quantum annealing techniques to make qubits. Quantum Computing, on the other hand, is using light (photons) as opposed to Rigetti and D-Wave's electricity-based foundation or IonQ's trapped atom technology. In theory, photonic qubits may be more energy efficient and easier to scale than other approaches that are heavily reliant on sophisticated cooling systems. ... there are quite a few red flags to point out Before buying into the idea that Quantum Computing is on the verge of a technological breakthrough, consider the following: Quantum Computing was once known as Innovative Beverage Group Holdings (IBGH). Why did the company pivot from beverages to qubits? Well, consider that IBGH went out of business, and the leftover management team decided to acquire a small company called QPhoton and completely shift its focus to quantum computing. Over the last year, Quantum Computing has generated $385,000 in sales. While the idea of photonic qubits is interesting, Quantum Computing is far from building a competitive moat over its rivals. The company's nominal revenue base and unproven roadmap hint at possible liquidity crunches down the road. For now, Quantum Computing appears to be relying on issuing stock as a means to raise cash and fund the operation. Despite these red flags, Quantum Computing has seen its market value climb from $55 million to $2.4 billion in just one year. QUBT Market Cap data by YCharts The company's valuation is far higher than what investors witnessed during prior stock market bubbles during the internet boom and the COVID-19 stock market euphoria. Where will Quantum Computing stock be in five years? Given the ideas explored above, it's clear that Quantum Computing has virtually nothing to show for its supposed innovative photonic processes. The lack of strategic partners and product-market fit has me thinking that Quantum Computing offers more along the lines of vaporware than anything groundbreaking at this time. With ongoing research and development (R&D) and capital expenditures (capex) required to explore quantum technology, Quantum Computing is likely going to continue tapping the capital markets for liquidity unless some transformative deals begin to take shape -- which I suspect is highly unlikely. In my eyes, Quantum Computing stock is benefiting for one reason above all else. The company's name isn't just associated with one of AI's hottest new themes -- it's literally the name of the actual trend. To me, this is a case study revolving around the idea of investors blindly chasing narratives over sound fundamentals. I think that Quantum Computing is headed toward insolvency and could wind up bankrupt by 2030 (if not sooner). Alternatively, regulators could begin to scrutinize the company more heavily, and Quantum Computing could end up as a delisted stock. Regardless of how things shake out, I think Quantum Computing's equity value will diminish significantly in the coming years. For this reason, I think the company will have little-to-no value by the end of the decade. Should you invest $1,000 in Quantum Computing right now? Before you buy stock in Quantum Computing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Quantum Computing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Globe and Mail
an hour ago
- Globe and Mail
The Smartest Growth Stock to Buy With $10,000 Right Now
Key Points While known to be a leader in e-commerce, this tech giant also has a strong presence in other tech-driven markets. Artificial intelligence is set to push further gains at this company's dominant cloud computing segment. The stock's current valuation looks reasonable given solid revenue and earnings growth. 10 stocks we like better than Amazon › Owning growth stocks can be an exciting way to invest your capital. These are usually companies that are operating with tailwinds at their back. This helps them put up strong revenue and profit gains. For investors, the possibility of scoring huge returns is certainly hard to ignore. But where can one find attractive opportunities? I believe there's one, which is a historical winner, that's hiding in plain sight. Here's the smartest growth stock to buy with $10,000 right now. Much more than just an e-commerce powerhouse With a market cap of $2.4 trillion and trailing-12-month net sales of $650 billion, there's no chance that Amazon (NASDAQ: AMZN) flies under the radar. However, it's a growth stock that investors must take a closer look at today. That's because Amazon is riding the wave of multiple secular trends that are propelling it forward. Investors know Amazon as the dominant e-commerce platform, with nearly 40% of all online shopping in the U.S. going through the marketplace. With a massive product assortment at cheap prices, plus fast and free shipping, consumers are keen on spending on the Amazon site. But the business is much more than an online retailer. Amazon also has a sizable digital ad segment that generated $56.2 billion in revenue in 2024. It's growing at a double-digit clip, too. And based on the profitability of industry leaders Alphabet and Meta Platforms, Amazon is surely raking in meaningful earnings from its advertising efforts. There's also Amazon Web Services, the industry's leading cloud computing platform. It has generally posted faster growth than the overall company. And with a first-quarter operating margin of 39.5%, it's also been the profit engine. According to Grand View Research, the global cloud computing market is expected to expand at a 20% yearly pace over the next five years to $2.4 trillion. AWS is clearly staring at a long growth runway. Amazon CEO Andy Jassy estimates that only 15% of IT spending has shifted to the cloud thus far, leaving plenty of opportunity for AWS to capture the ongoing transition. The rise of artificial intelligence helps in this regard, as enterprise customers have a growing desire to build AI apps and tools using the products and services that AWS offers. "Before this generation of AI, we thought AWS had the chance to ultimately be a multi hundred-billion-dollar revenue run rate business. We now think it could be even larger." Jassy said on the Q1 2025 earnings call. Still a smart buy With a huge revenue base, it can undoubtedly be difficult for Amazon to continue growing the top line at a respectable clip. The company operates from a position of strength, though, because weakness in one area can more than be made up for by robustness in another. Most other businesses aren't as fortunate. This supports Amazon's powerful competitive standing. Wall Street consensus analyst estimates call for revenue to increase at a compound annual rate of 9.7% between 2024 and 2027. However, I wouldn't be surprised at all to see growth come in better than this forecast. Amazon's ability to leverage its disruptive and innovative capabilities to penetrate adjacent growth vectors is a phenomenal trait. A renewed focus on operational efficiency has supported profitability gains in recent years. And this is set to continue. Analysts believe earnings per share will jump by 17.6% between 2024 and 2027. The stock is reasonably valued, at a forward price-to-earnings ratio of 36.6. Given Amazon's dominance, investors shouldn't hesitate to buy $10,000 worth of the business, which should get you about 44 shares. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
