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.

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.

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.

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.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool's board of directors. Geoffrey Seiler holds positions at Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Meta Platforms, Microsoft, Nvidia and Oracle. The Motley Fool recommends Broadcom and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.

Is Nvidia stock a buy now? was originally published by The Motley Fool