Nvidia (NVDA) once again grabbed the headlines when its CEO, Jensen Huang, confirmed funding in Elon Musk’s xAI. The company agreed to invest up to $2 billion in xAI’s latest $20 billion raise. As CFO, Colette Kress has emphasized that Nvidia’s capital deployment strategy prioritizes accelerating industry AI adoption, even above buybacks.
CEO Jensen Huang says he’s “super excited” about xAI and only regrets “that I didn’t give [it] more money.” Musk personally invited Nvidia to invest, and Huang is “delighted” by the opportunity.
In practical terms, the xAI investment means more Nvidia GPUs powering Musk’s Colossus 2 data center and a stake in a potentially transformative AI player. This strategic backing of emerging AI leaders, alongside past stakes in OpenAI and others, can strengthen Nvidia’s AI ecosystem position and future chip sales.
NVDA stock has soared on the back of the AI boom. So far in 2025, NVDA is up over 40%, recently becoming the first company to surpass a $4.5 trillion market cap. Investors are now watching for it to hit the $5 trillion mark.
This surge extends an incredible multi-year rally. Nvidia has been the top-performing S&P 500 stock over the past 10, 15, and 20 years, and it has been the third-best stock over the last five years. Since late 2022, its market value has jumped from roughly $418 billion to $4.56 trillion.
According to independent analysis, Nvidia’s total returns have reached 1,341% over five years, 31,025% over 10 years, and 72,005% over 15 years. Simply put, Nvidia’s dominance in AI chips and data center infrastructure has powered one of the most remarkable runs in market history.
Following its unprecedented rally, NVDA’s valuation has reached a notably high level. Its price-to-book (P/B) ratio stands at 46, significantly above the sector median of 4, indicating it is trading at a premium. Similarly, the price-to-sales (P/S) ratio is 28, well above the sector median of 4, further suggesting an expensive stock compared to its peers.
Nvidia tops its Q2 earnings estimate on both top and bottom lines by far margins. In Q2 fiscal 2026, the company reported revenue of $46.74 billion, up an impressive 56% year-over-year (YoY). The Data Center segment, which drives most of Nvidia’s AI business, delivered $41.1 billion, also up 56%. Even its Gaming division, once the company’s main focus, continued to rebound with $4.3 billion in sales, a 49% increase from last year.
Profitability stayed exceptional. Nvidia posted a gross margin of about 72.4%, and earnings per share climbed 61% to $1.08.
The company’s cash generation remains massive, too; it returned $24.3 billion to shareholders in the first half of the year through buybacks and dividends, and its board just approved another $60 billion for repurchases.
Looking ahead, Nvidia expects Q3 revenue of roughly $54 billion with margins near 73%, signaling that demand for its AI chips isn’t slowing down anytime soon.
Another positive is widening global access to Nvidia’s chips. The U.S. government just approved billions of dollars in Nvidia AI chip exports to the UAE under a new AI partnership. This clears the way for large Gulf data center projects and opens a lucrative new market for Nvidia’s high-end GPUs.
Such developments, along with Nvidia’s industry-leading products, add to the company’s growth runway.
The analyst community is overwhelmingly bullish on Nvidia’s growth prospects. KeyBanc just raised its price target to $250, citing ramped-up CoWoS (chip-on-wafer-on-substrate) supply that underpins Nvidia’s AI growth.
Similarly, Barclays bumped its target to $240, pointing to an anticipated multitrillion-dollar increase in AI data center spending.
Moreover, Melius Research upped its target to $275 on strong data center demand and argues Wall Street forecasts are still too conservative.
Consensus from Wall Street is also a “Strong Buy” from 47 analysts. The average 12-month price target is $217, which suggests the stock could climb up to 15% from here.
In short, virtually all the target changes in the last few weeks have been higher, reinforcing the bullish case.
Nvidia’s business and stock are firing on all cylinders. The xAI investment connects it with one of the most fascinating emerging AI projects, and its wave of uninterrupted rises in the number of GPUs (supported by unprecedented revenues and profits) has left Wall Street optimistic. This is valid because of its historical returns unmatched by other companies and its nature as an AI picks and shovels provider, which offers more upside in the future. The recent upgrades of analysts demonstrate confidence.
These catalysts, along with a solid core, strategic acquisitions, and a strong market share, balance towards the bull side. NVDA stock continues to be a long-term buy for investors willing to be exposed to the AI megatrend.
On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com