Is Nvidia stock a buy now?

To say that Nvidia (NVDA 3.43%) has been a darling of the investment community to put it mildly. This business crushed it for investors, as shares are up an incredible 2,447% over the past five years, fueled most recently by a monster 171% surge right through 2024.

This top artificial intelligence ( AI ) stock is trading near its all-time high as of this writing. After such an incredible run, should you still be considering buying Nvidia right now?

Demand is off the charts

Nvidia sells graphics processing units (GPUs) that provide computing power for various purposes. More than two decades ago, the main function was to support PC games. But what has put the company on the map in recent years has been its GPUs, which make it possible to train AI models in massive data centers, which now represent the bulk of the chipmaker’s sales.

The particular desire of companies across the board to develop, invest in and offer their own customers various AI-related services results in a direct advantage for Nvidia because it has a monopolistic position in the market for AI chips. The company can essentially be seen as the best investment in the AI ​​space.

Demand has been off the charts. The recently launched Blackwell architecture is experiencing tremendous customer interest. “Blackwell demand is staggering and we are racing to scale supply to meet the incredible demand that customers place on us,” Chief Financial Officer Colette M. Kress said of the company’s financial statements. 2025 third quarter earnings call.

Revenue in the most recent financial quarter increased by 94% year-on-year. And Wall Street analysts expect sales to jump 72% in the fourth quarter. It is also worth pointing out that the business is extremely profitable, with an amazing 62% operating margin in the fourth quarter.

Nvidia’s risk factors

If you’re considering buying shares, the company’s fundamental momentum is hard to ignore. But you have to look at the valuation. The share trades at one price-to-earnings ratio (P/E) of 56.9, which is a premium of 77% to the technology-heavy Nasdaq 100 index. The company’s remarkable growth and profitability may warrant a high valuation, but it’s certainly still elevated. And investors should be aware of negative factors.

Perhaps the most notable risk facing Nvidia comes from its own customer base, due to concentration with the top four representing 53% of receivables per share. October 27. It is believed that this list may include Meta platforms, Microsoft, Amazonand Alphabet.

Everyone is develop their own AI chips in an effort to bring this costly effort in-house, a smart strategy given the billions of dollars they’re all investing to boost their AI capabilities. The long-term result could be weaker demand for Nvidia as these deep-pocketed tech giants move to vertically integrate their supply chains.

We could also witness the bursting of the AI ​​bubble. Investors seem to always overestimate what new technologies can do in the short term, bidding up asset prices and prompting corporate executives to direct resources to avoid being behind the trend.

But these AI models are extremely expensive to operate, users still find bugs when working with them, and there may be a limit to their performance as the available unused data in the world shrinks. Nevertheless, AI is hyped as a solution to a lot of problems, which is not a certainty.

Tread with caution

It’s extremely hard to argue with what Nvidia has been able to achieve, quickly rising through the ranks to become one of the world’s most valuable companies as it positioned itself at the forefront of the AI ​​boom. This has undoubtedly made the company a winning choice among investors who have made plenty of money owning the stock.

However, I always struggle with recommending buying shares in a company when optimism, excitement and greed run high, as these things can be unsustainable. It’s also best not to ignore the key risks of valuation, customers working to move upstream, and the chance of the AI ​​bubble bursting.

All in all, I don’t think Nvidia is a smart buy right now.