If you’re looking for an investment that can beat the S&P 500 (SNPINDEX: ^GSPC), you don’t have to find a needle in a haystack. Despite being the world’s largest publicly traded company, Nvidia (NASDAQ: NVDA) 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.
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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.
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 (NASDAQ: AVGO) and AMD (NASDAQ: AMD) are two of its biggest competitors, but the gap between them and the leader is substantial.