Given that the stock is up nearly 190% year-to-date and nearly 2,830% over the past five years, investors may be wondering if that's the case Nvidia (NVDA -2.81%) is still a buy after these huge gains. The gains have made it the world's second-largest company by market capitalization.

Nvidia has clearly been riding the artificial intelligence (AI) wave, but here are four reasons why the stock still looks like a buy today, even after its strong performance.

1. The construction of AI is still in its early stages

The biggest bull case for Nvidia is that despite the insane demand the company is seeing for its graphics processing units (GPUs) to support AI infrastructure, AI expansion is apparently still in the early stages of what is expected to be a long game. Big tech companies and well-funded AI startups like OpenAI and Elon Musk's xAI have poured money into building AI-focused data centers to support training large language models (LLMs) and performing AI inference.

This can be seen in the increasing capital expenditure (capex) budgets of large technology companies and management comments on future spending. For example, alphabet And Metaplatforms have both pointed out that the biggest risk in their AI spending is not overspending, but underinvesting oracle has stated that there is no end in sight to AI infrastructure spending in the next five to ten years.

In the meantime, MicrosoftFinancial leases completed but not started (largely for AI data centers) more than tripled last year to a whopping $108.4 billion.

AI models require exponentially more computing power to train as they become more advanced and sophisticated. For example, Alphabet said its Llama 4 LLM would require up to ten times as much processing power as its previous version, while xAI's Grok 3 required five times as many GPUs to train as Grok 2.

All of this points to the increasing need for GPUs, an area where Nvidia has become the dominant leader.

Image source: Getty Images.

2. Nvidia is the market leader

While the need for GPUs is likely to continue unabated, Nvidia is not the only company capable of producing AI chips. Advanced micro devices also makes GPUs, while some companies, such as Broadcomsupport companies in developing tailor-made AI chips for their specific requirements.

However, Nvidia has become the clear market leader in this area with a market share of over 80%. This is due not only to its strong chip offering, but also to the wide lead the company has been able to create in this area with its CUDA software. Long before the AI ​​frenzy, Nvidia developed its CUDA platform to help developers program their GPUs using software the company made available for free. As a result, CUDA became the standard program that developers in the industry used to learn to program these chips. As a de facto industry standard, it makes it more difficult for other companies to enter the space and capture significant market share.

At the same time, Nvidia recently accelerated the development of its chips from a two-year iteration cycle to a one-year cycle. This should help the company maintain its technological leadership position and continued pricing power as it will always be able to offer new and improved designs. The company only recently started shipping chips based on its Blackwell architecture, but plans to launch new chips based on its Ruby architecture as early as 2026.

At this point, there doesn't seem to be much danger of Nvidia losing significant market share.

3. Nvidia has an attractive valuation

Despite the enormous price increase of Nvidia shares in recent years, the share is still attractively valued given the opportunities it presents. It trades at a forward price-to-earnings (P/E) ratio of around 35, based on analyst estimates for 2025, and a price-to-earnings-to-growth (PEG) ratio of just over 0.9. A PEG below 1 is generally considered undervalued, and growth stocks often have PEGs well above 1.

NVDA PE Ratio (Forward 1 Year) data from YCharts

Therefore, Nvidia still has a big AI opportunity in front of it and a big competitive advantage – and the company is also trading at a very reasonable valuation.

4. The world's largest companies can still outperform

With a market cap of over $3 trillion, investors may be concerned about how much bigger Nvidia can get. However, the fact that the company is one of the largest companies in the world doesn't mean its stock can't outperform over the next decade.

For example, Apple was the largest company in the world about 10 years ago, with a market cap of about $500 million in early 2014. Just over 10 years later, it is still the largest company in the world, but with a market cap of over $3.5 trillion -dollars. That's a 7-fold increase in 10 years.

Another example is that at the beginning of 2010, Microsoft was the largest technology company with a market capitalization of almost $268.56 billion. Ten years later (in 2020), it was the second largest technology company with a market cap of $1.2 trillion, an increase of almost 4.5 times.

Nvidia's current massive size doesn't prevent the stock from rising significantly in the coming years, especially if the right technology trend drives growth.