Investors are always on the hunt for the next major breakthrough, and in the rapidly evolving technology sector, this search is particularly intense. Consider the remarkable ascent of Nvidia (NVDA -3.31%) over the past 18 months. While revenue nearly tripled during this period, the company’s earnings per share, fueled by its leadership in artificial intelligence (AI), saw a staggering 287% increase. The AI landscape promises many more success stories, along with winners in other tech domains. Every retail investor dreams of discovering the next Nvidia. However, the best opportunities sometimes lie where they already are.
Nvidia’s Long AI Runway
The surge in Nvidia’s business is largely attributed to its data center segment, an area it currently dominates. Full-year revenue from the data center business surged by 142% to reach $115.2 billion in the last reported fiscal year.
Nvidia AI data training center.
While the extraordinary pace of growth is naturally expected to moderate, a constant influx of new, more powerful AI platforms should sustain revenue increases. Despite more challenging year-over-year comparisons, the company’s guidance for the first quarter of fiscal 2026, scheduled to be reported in May, anticipates a robust 65% revenue growth. This sustained demand is driven by the full-scale production of Nvidia’s Blackwell AI architecture. During the fiscal 2025 fourth-quarter conference call in late February, Nvidia CFO Colette Kress mentioned that Blackwell customers “are racing to scale infrastructure to train the next generation of cutting-edge models and unlock the next level of AI capabilities.” Furthermore, the company is already looking ahead with the anticipated launch of its next-generation Rubin platform in 2026. Nvidia CEO Jensen Huang is slated to deliver the keynote address at Nvidia’s GTC 2025 conference on March 18. This global AI conference for developers is the likely venue for Huang to discuss the benefits customers anticipate from both the Blackwell and forthcoming Rubin technologies.
Beyond the Data Center
Looking ahead to the next decade, investors should also evaluate Nvidia’s other business segments, not just data centers. The gaming sector remains a multibillion-dollar enterprise for Nvidia, with revenue increasing by 9% to $11.4 billion last year. Nevertheless, the automotive and robotics segments may emerge as the next major growth catalysts. Fourth-quarter sales in this segment more than doubled, reaching a record $570 million. The potential for future growth is arguably vast, with assisted and autonomous driving systems becoming increasingly widespread. Nvidia has announced a collaboration with Toyota to incorporate its Drive platform into the next generation of vehicles. Additionally, the embedded operating system will be utilized by a growing number of fully autonomous vehicle manufacturers. However, these prospective gains are not yet fully reflected in Nvidia’s stock valuation, as investor focus remains intensely centered on the sustainability of data center sales growth. This situation presents a potential opportunity for investors.
Is Nvidia Stock a Buy?
Nvidia’s stock price is currently trading close to where it was six months ago after having dropped nearly 20% in the past three months. Despite several potential catalysts, the stock is trading near its lowest price-to-earnings (P/E) ratio in three years. While the current P/E of 38 might seem high, it’s calculated on a trailing-12-month basis. Looking forward, the P/E ratio appears very reasonable, even cheap. A forward P/E of about 25 creates an attractive entry point. Considering the ongoing growth trajectory of its data center business, coupled with prospective catalysts that could significantly expand its market in the coming years, investing in Nvidia stock now could be the most profitable decision of the decade.
