To score a stock market win, it’s important to get in on a variety of quality stocks and hold onto them for the long term -- a period of five to 10 years, for example. This offers those companies the time to develop and grow, and this should translate into earnings strength and positive stock performance. At least that’s the situation we’re ideally looking for as we select stocks. And if several of our investments deliver this kind of story, we’ll benefit.
These stories that progressively power our portfolios higher are fantastic, and we couldn’t build a path to wealth without them. At the same time, though, it’s a great idea to be on the lookout for that one standout stock that comes along not often -- maybe once every several years -- and this particular player could supercharge our returns. This is usually a company that’s an innovator and leader in a high-growth field, and today that industry is artificial intelligence (AI).
AI has the power to transform industries and our daily lives, and analysts forecast this market is set to grow from about $200 billion today to $1 trillion by 2030. Let’s check out an AI stock that’s already delivered big rewards to investors but might be just getting started -- in fact, this AI player could be the best investment of the decade.
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The next wave of AI growth
Though AI stocks have soared in recent times, we’re in the early days of this story. Data centers still are in the process of building out infrastructure, and companies are just getting started when it comes to applying AI to their businesses to gain in efficiency. And right now, we’re at the very beginning of what may be the next huge wave of AI growth, and that’s agentic AI. This refers to AIs that analyze complex problems, reason, develop a solution, and apply it. Companies selling tools to develop agentic AI and those who use agentic AI to gain in efficiency both could score a win here.
Now, the AI stock that represents a way to get in on all of this and more may be a name that’s very familiar to you. It’s none other than Nvidia (NVDA -2.60%). You might say, “Nvidia stock already has climbed almost 150% over the past year -- is potential limited?” It’s important to consider the company’s position in the AI market, and that offers us reason to be extremely optimistic.
Nvidia is the No. 1 designer of graphics processing units (GPUs), the AI chips powering some of the most critical of AI tasks like the training and inferencing of models. And wisely, the company has used this as a starting point to create an entire menu of AI offerings that make it the go-to player for anything in this area. This has helped Nvidia grow its earnings in the double- and triple-digits to record levels -- with revenue reaching a high of $35 billion in the most recent quarter. The company’s gross margin of more than 70% shows us it’s highly profitable on sales, another positive point to note.
Nvidia could have farther to go
Now here’s why I believe Nvidia has a lot more to gain in the years to come. As mentioned, Nvidia has successfully expanded its range of products and services to encompass every stage of AI development -- so customers may go to Nvidia for the basics like GPUs when building out a data center and to Nvidia for software to develop and run AI across their businesses.
The company also has zoomed in on specific industries -- from healthcare to automotive -- to develop AI platforms to suit their needs. During his presentation at CES in Las Vegas earlier this month, Nvidia chief Jensen Huang says the company is working with every major automaker in the autonomous vehicle market. And Nvidia’s also ready to benefit from agentic AI, offering customers tools to built AI agents to suit their businesses.
This makes me confident that Nvidia could continue to significantly grow earnings over time as it benefits from the entire AI story -- not only the initial buildout. All of this means Nvidia stock, trading at 46x forward earnings estimates, looks reasonably priced considering the growth opportunity and still could have plenty of room to run. Nvidia is set to play a major role in every phase of AI growth, and that’s why this stock could be the best investment of the decade.
