1 Artificial Intelligence (AI) Stock Dividend Stock Up 2,890% in 5 Years to Buy Now, According to Wall Street

Nvidia (NVDA 1.63%) was the best performing stock in S&P 500 (SNPINDEX: ^GSPC) over the past five years, the stock is up 2,890%. The company completed two stock splits during that period. The first was a 4-for-1 stock split in July 2021, and the second was a 10-for-1 stock split in June 2024.

Despite the monster earnings, Wall Street is still bullish on the semiconductor company. Of the 65 analysts covering Nvidia, 92% give the stock a buy rating, and the remaining 8% give the stock a hold rating. Moreover, Nvidia’s average price target of $150 per share implies a 14% upside from the current share price of $132.

Here’s what investors should know about this AI stock.

Nvidia is the foundation of the AI ​​movement

Nvidia designs the most coveted graphics processing units (GPUs) in the computing industry. GPUs perform technical calculations faster and more efficiently than central processing units (CPUs), enabling them to accelerate complex workloads such as artificial intelligence (AI). Nvidia has over 80% market share in data center AI processors, and its leadership is rooted in CUDA.

Nvidia introduced its CUDA programming model in 2006. It turned GPUs (originally designed for computer graphics) into general-purpose chips capable of accelerating all kinds of applications. The CUDA ecosystem now includes hundreds of software libraries that streamline development workflows across a wide range of disciplines, from data analysis and machine learning to scientific simulation and computational chemistry.

No other chip maker offers comparable development tools, so Nvidia GPUs have become the gold standard. “Year after year, Nvidia has responded to the needs of software developers by pumping out specialized libraries of code, enabling a huge range of tasks to be performed on its GPUs at speeds that were impossible with conventional, general-purpose processors like those made by Intel and AMD,” according to The Wall Street Journal.

More recently, Nvidia has moved further into software and services with AI Foundry and AI Enterprise. The former enables companies to customize large language models pre-trained on Nvidia’s supercomputing infrastructure, and the latter simplifies the development of AI applications in use cases such as content generation, robotics and predictive analytics. “Nvidia Software will exit the year at a $2 billion run rate,” CEO Jensen Huang recently told analysts.

Finally, Nvidia further consolidated its leadership and increased its ability to monetize AI by expanding into new data center hardware verticals. “We literally build the entire data center and we can monitor everything, measure everything and optimize everything,” Huang explained. Importantly, Nvidia has secured a leadership position in generative AI networking equipment, and demand for its first data center server processor (Grace) is very strong among supercomputing customers.

Here’s the bottom line: Nvidia is more than just a chipmaker. It is a full-stack accelerated computing company with products spanning hardware, software and services. The breadth of its portfolio, along with the best-in-class performance of its GPUs, gives Nvidia a competitive edge that rival chipmakers will find hard to beat.

Nvidia stock is trading at a reasonable valuation compared to Wall Street’s forecast

Nvidia reported Q2 financial results that beat expectations. Revenue rose 122% to $30 billion, driven by particularly strong growth in the data center segment, and non-GAAP earnings rose 152% to $0.68 per diluted share.

“Nvidia achieved record revenue as global data centers are in full swing to modernize the entire computing stack with accelerated computing and generative AI,” Huang said. The chart below shows Nvidia’s revenue growth in its four main business segments.

Data source: Nvidia. Note: Q2 2025 ended July 2024.

In the short term, Nvidia has a major catalyst in the upcoming release of its Blackwell GPU. The next-generation chip can handle AI training and inference tasks four times faster and 30 times faster, respectively, compared to the previous Hopper architecture. The Blackwell production ramp will begin in the fourth quarter of fiscal year 2025 (ended January 2025). CEO Jensen Huang says it will likely be the most successful product in the history of the computing industry.

Looking further ahead, Grand View Research says sales of AI accelerators will grow 29% annually through 2030, while spending on AI hardware, software and services will grow 36% annually over the same period. Nvidia is one of the companies best positioned to benefit. Indeed, CFRA’s Angelo Zino says that Nvidia “will be the most important company for our civilization in the next decade as the world becomes increasingly driven by AI.”

Wall Street expects Nvidia’s earnings to grow 37% annually over the next three years. That consensus makes the current valuation of 62 times earnings look reasonable. These numbers give Nvidia a PEG ratio of 1.7, a discount to the three-year average of 3.1. Patient investors can confidently buy a small position in Nvidia today and should plan to add a few more shares if the stock pulls back 10% or more.