Jensen Huang Just Delivered Incredible News for Nvidia Stock Investors

Key Points

• Nvidia has become the world's largest company on the back of demand for its artificial intelligence chips.

• Nvidia's incredible momentum might have legs if a recent prediction by CEO Jensen Huang comes to fruition.

• Nvidia stock might be cheap right now based on its historical valuation and the company's future earnings potential.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) stock has soared by an eye-popping 1,100% since the start of 2023, which is when the artificial intelligence (AI) boom started gathering momentum. With a market capitalization of $4.2 trillion, it's now the world's largest company, and there might still be plenty of growth in the tank.

Nvidia recently released its operating results for its fiscal 2026 second quarter (which ended on July 27), and its data center business continued to grow rapidly thanks to surging sales of its industry-leading AI chips. However, according to comments by CEO Jensen Huang, the company is still in the early innings of a multi-year demand wave that could be worth trillions of dollars. Read on.

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Image source: Nvidia.

Nvidia's flagship Blackwell Ultra chips are now shipping

Nvidia's H100 graphics processing unit (GPU) was the best data center chip on the market for AI training and inference during 2023 and most of 2024. But the latest AI reasoning models require significantly more computing capacity because they spend more time "thinking" before generating outputs, rendering Nvidia's Hopper GPU architecture (upon which the H100 is based) almost insufficient.

Jensen Huang says reasoning models -- which include OpenAI's latest GPT-5 and Anthropic's Claude 4 -- consume up to a thousand times more tokens (words, phrases, and symbols) than traditional one-shot large language models (LLMs). To deliver the necessary computing power, Nvidia designed two new GPU architectures called Blackwell and Blackwell Ultra.

The latest Blackwell Ultra GB300 chip delivers a whopping 50 times more performance than the old H100 in certain configurations, so it's a major leap forward. Nvidia started shipping commercial quantities to customers during the second quarter, with industry giants like OpenAI, Amazon (NASDAQ: AMZN) Web Services, Microsoft (NASDAQ: MSFT) Azure, and Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google Cloud among the earliest adopters.

Nvidia's second-quarter revenue came in at $46.7 billion, which was up 56% from the year-ago period. The data center segment was responsible for 88% of that revenue thanks to continued demand for AI GPUs, and the GB300 is likely to fuel further growth in the remainder of the fiscal year.

This is the tip of the iceberg, according to Jensen Huang

Over the past couple of months, some of Nvidia's biggest customers have issued fresh capital expenditure (capex) forecasts that indicate how much money they plan to allocate toward AI data centers and chips in the short term:

• Alphabet recently increased its capex forecast for calendar-year 2025 from $75 billion to $85 billion.
• Meta Platforms (NASDAQ: META) recently increased the low end of its 2025 capex guidance from $64 billion to $66 billion, but the company says it could spend as much as $72 billion.
• Amazon's 2025 capex could top $118 billion based on the company's most recent guidance, which would be a record number.
• Microsoft's capex came in at $88 billion during its fiscal year 2025 (which ended on June 30), and the company plans to spend even more in fiscal 2026.

That works out to more than $350 billion in combined annual spending from just four companies. Of course, not all of that money will flow to Nvidia, but the company will capture a sizable chunk of chip spending because it's the market leader.

But this might be just the tip of the iceberg. During Nvidia's Q2 conference call with investors, Jensen Huang said he expects data center operators to spend up to $4 trillion on AI infrastructure between now and 2030, creating a mind-boggling opportunity for his company.

Nvidia stock might be cheap right now

Although semiconductor giants like Advanced Micro Devices and Broadcom are now making competing AI data center chips, Nvidia's hardware remains comfortably ahead of the pack. Therefore, its stock still represents one of the best opportunities for investors looking to profit from the trillions of dollars in infrastructure spending in the pipeline.

Nvidia stock is trading at a price-to-earnings (P/E) ratio of 49.6 as I write this, which is a discount to its 10-year average of 60.6. But Wall Street's consensus estimate (provided by Yahoo! Finance) suggests the company could deliver total earnings of $4.48 per share during fiscal 2026, placing its stock at a forward P/E ratio of just 38.7.

That means Nvidia stock would have to soar by 56% over the next six months just to trade in line with its 10-year average P/E ratio of 60.6.

NVDA PE Ratio data by YCharts

But it gets better, because Nvidia plans to launch an entirely new GPU architecture called Rubin next year, which could deliver 3.3 times more performance than Blackwell Ultra. According to Wall Street's early estimates, Rubin could help the company's earnings soar by another 41% to $6.32 per share in fiscal 2027 (which begins in February 2026), fueling more potential upside in Nvidia stock.

As a result, investors have a lot to look forward to, particularly if AI infrastructure spending totals $4 trillion over the next five years like Huang predicts.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.