Is It Time to Buy Nvidia Stock?

Key Points

• OpenAI and Nvidia unveiled a plan to deploy at least 10 gigawatts of Nvidia systems, with Nvidia intending to invest up to $100 billion in OpenAI.

• Nvidia also announced a new collaboration with Intel, including a $5 billion equity investment, to co-develop data center and PC products.

• Nvidia's momentum and guidance are strong, but its premium valuation means there is little room for error.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has already given investors a thrilling ride over the past two years, and the story just keeps getting better. Over the last week, the company unveiled two major partnerships -- big moves that further cement its leadership in the world of next-gen computing. The market responded quickly, with shares jumping as investors weighed what these new deals could mean for Nvidia's future demand, supply chain, and competitive edge.

Nvidia designs and sells accelerated computing platforms, including GPUs, networking, systems, and software, which are used to train and run artificial intelligence (AI) models in data centers and, more recently, in PCs. These new partnerships are important because they could drive both near-term system shipments and deeper integration with major AI players over the long term. For investors, the key is weighing this momentum against a valuation that already assumes strong execution.

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Fresh partnerships bring bigger catalysts

The biggest news is a new letter of intent between OpenAI and Nvidia to deploy at least 10 gigawatts of Nvidia systems, which would mean millions of GPUs powering OpenAI's next generation of models. Nvidia plans to invest up to $100 billion in OpenAI as this capacity is rolled out, with the first gigawatt expected in the second half of 2026 using the Vera Rubin platform. This scale gives Nvidia multiyear demand visibility for its data center business and aligns its hardware and software more closely with a leading AI developer.

A few days earlier, Nvidia and Intel (NASDAQ: INTC) announced another partnership. Intel will design and manufacture custom x86 data center CPUs for Nvidia's AI infrastructure platforms, and will also build x86 system-on-chips that include Nvidia RTX GPU chiplets for PCs. Nvidia will invest $5 billion in Intel's common stock at $23.28 per share, pending approvals. This deal gives Nvidia more flexibility in CPU supply and strengthens its position in AI PCs, a segment that could expand its addressable market over time.

Strong results, high expectations

This strategic news lands on top of robust fundamentals. In Nvidia's second quarter of fiscal 2026 (the period ending July 27), Nvidia's revenue rose 56% year over year to $46.7 billion, with data center revenue also up 56% to $41.1 billion. Looking ahead, Nvidia guided for third-quarter revenue of about $54 billion (plus or minus 2%) and expects non-GAAP gross margin around 73.5% -- and still sees margins exiting the year in the mid-70s. That mix of growth and profitability remains rare in semiconductors.

Management's commentary drives home the company's confidence in the product cycle.

"Blackwell is the AI platform the world has been waiting for ... and demand is extraordinary," Nvidia CEO Jensen Huang said in the earnings release, noting that production of Blackwell Ultra is ramping quickly. The company also expanded its share repurchase authorization by $60 billion in late August, after returning $24.3 billion to shareholders in the first half. These are signals of management's confidence in both Nvidia's cash generation and the long runway for accelerated computing.

There are, of course, risks investors should keep in mind. Export restrictions continue to complicate shipments of certain parts to China; Nvidia's latest outlook did not assume any H20 shipments to China. Additionally, competition is intensifying across the stack -- from rival accelerators to alternative interconnects and custom silicon efforts at large customers. Finally, while the OpenAI and Intel announcements expand opportunity, they also add execution and regulatory variables that could affect timelines.

But the biggest issue is arguably valuation. Even after the recent pullback and rebound, Nvidia's market value sits around $4.5 trillion. On guidance, revenue is running at an annualized pace near $200 billion with non-GAAP gross margins in the mid-70s, which helps the premium make more sense than a quick comparison to typical chipmakers. But it still implies that investors expect years of outsized growth, sustained leadership in systems and software, and limited competitive disruption. For prospective buyers, that is a high bar.

Given Nvidia's strong execution, solid guidance, and new partnerships that support demand and ecosystem strength, holding the stock makes sense for current investors. For those looking to start a position, it may be wise to wait for a better entry point. Nvidia could continue to outperform as AI infrastructure grows, but at today's valuation, returns could disappoint if growth only meets expectations.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.