What Is One of the Best Tech Stocks to Hold for the Next 10 Years?
News Summary
Nvidia has been one of the top-performing tech stocks in recent years, with its shares soaring 22,000% over the last decade, 1,230% in the past five years, and 30% in the last 12 months, outperforming the Nasdaq Composite's 20% one-year return. Despite increasing competition in the artificial intelligence (AI) chip market, Nvidia continues to demonstrate leadership in delivering market-beating returns for investors. Nvidia's compelling investment case stems from its provision of a full technology stack, encompassing chips, software, and networking components essential for building AI data centers. Its GB300 Blackwell GPUs remain the most in-demand AI chips entering 2026. Management has indicated that compute capacity in cloud data centers utilizing Nvidia chips is fully utilized, with demand for more chips exceeding expectations. The stock currently trades at a reasonable forward price-to-earnings ratio of 24, with analysts projecting its earnings per share to compound at an annual rate of 37% over the coming years.
Background
Nvidia Corporation (NVDA) is a global leader in designing graphics processing units (GPUs) and a pioneer in AI computing. Founded in 1993, it initially gained prominence for its GPUs in the gaming sector but has since expanded its technology applications across data centers, professional visualization, automotive, and AI. In the mid-2020s, with the explosive growth of generative AI, the demand for high-performance computing capabilities surged. Nvidia's GPUs became indispensable core hardware for training and deploying AI models. Its CUDA software platform and comprehensive ecosystem further solidified its dominant position in the AI hardware market.
In-Depth AI Insights
Is Nvidia's valuation justified, and are its growth expectations fully priced into the stock? Nvidia's current forward price-to-earnings ratio of 24, coupled with analysts' expectation of a 37% annual compound growth rate in EPS over the next several years, suggests that, in the current 2025 market environment, its valuation might be considered reasonable relative to its high growth potential. However, such a 'reasonable' valuation often hinges on strong market conviction in its future growth trajectory. Any signs of regulatory scrutiny, increased competition, or a slowdown in AI spending could swiftly alter market sentiment. Beyond the chips themselves, how does Nvidia's 'full technology stack' strategy create a moat, and can this moat withstand long-term competition? Nvidia's full-stack strategy—integrating chips (GPUs), software (the CUDA platform), and networking components—establishes a formidable competitive barrier. The CUDA ecosystem is particularly critical, attracting a vast developer base and AI researchers, making it challenging for competitors to simply introduce high-performance chips and compete effectively. This deep integration and ecosystem effect create significant switching costs. However, with increasing efforts from Google's TPUs, AMD's MI series, and major cloud providers like Amazon AWS developing custom AI chips, Nvidia's moat faces continuous erosion. Its long-term defensibility will depend on its ability to sustain innovation and keep its ecosystem appealing to developers. Given incumbent US President Trump's 'America First' policies, how might Nvidia, as a leading US tech giant, navigate future geopolitical risks or policy support? As a leading US-based technology company, Nvidia stands to benefit from the Trump administration's 'America First' and technological sovereignty policies, potentially through subsidies or trade protection. However, its extensive global supply chain and reliance on international markets also expose it to geopolitical tensions, particularly concerning technological competition with China. US government restrictions on semiconductor exports might protect Nvidia's domestic market position in the short term, but in the long run, could incentivize other nations to develop their own AI chip capabilities, thereby eroding Nvidia's global market share.