Nvidia(NASDAQ: NVDA) soared 171% last year and has established itself as a leader in one of today's highest-growth areas: artificial intelligence (AI). The tech giant not only dominates the AI chip market, but it's also built an empire of AI products and services that make it the go-to place for any company aiming to develop an AI platform.
As a result, Nvidia's earnings have taken off, driven by its data center business -- the unit that serves AI customers. In the most recent quarter, revenue reached a record of more than $35 billion. That's more than the company generated annually just a couple of years ago.
All this success has been great for Nvidia and its shareholders. Now, though, investors wonder if the momentum will continue. For example, news last month from Chinese AI company DeepSeek prompted concerns about demand for Nvidia's most expensive AI chips. But in spite of this and any other concerns, two points in particular could make Nvidia a no-brainer buy in February.
Image source: Getty Images.
"Staggering" demand for Nvidia's Blackwell
So first, let's consider the Nvidia story so far. The company designs and sells the world's most powerful graphics processing units (GPUs), or chips used for crucial AI tasks like the training and inferencing of models. Big tech companies from Meta Platforms to Amazon are customers, and demand for Nvidia's latest chip architecture -- Blackwell -- has been "staggering."
Blackwell is launching now, and Nvidia expects several billions of dollars in Blackwell revenue in the fourth quarter that ended at the close of January. So, the product is expected to be a smashing success right out of the gate.
The recent news that caused Nvidia stock to stumble suggested U.S. tech companies are spending too much on AI -- and could be doing the same job with a smaller investment. Startup DeepSeek said it trained its model in just two months and for less than $6 million. This compares to the billions of dollars U.S. companies have invested -- and a lot of that has gone toward Nvidia's top chips and related products.
But I think the market was too quick to jump to conclusions. Whether DeepSeek really completed training for that amount or not, Nvidia's highest-performance GPUs still have proven they are more efficient than the company's older GPUs -- and even other rival chips on the market today. And since speed and efficiency is the name of the game, it's unlikely Nvidia's customers will change their strategies and abandon the latest innovations.
Two reasons why Nvidia is a buy now
Now, let's consider the two reasons why Nvidia is a no-brainer buy in the month of February. The first is that Nvidia is set to report fiscal fourth-quarter earnings later this month -- on Feb. 26 -- and at that point we'll learn more about the Blackwell launch and initial revenue from the platform. Nvidia's earlier comments about high demand offer us reason to be optimistic, and positive news could send the shares soaring from today's level.
The second reason to buy Nvidia now is the company not only will continue to benefit from the ongoing AI infrastructure build-out -- a good example is the newly announced $500 billion infrastructure project in the U.S. -- but it also should benefit from a new wave of AI growth just ahead. This is as companies start to apply AI to their businesses -- an example of this is the creation of AI agents, or software that can consider a problem, develop a solution, and apply it.
Nvidia and its partners have created blueprints that integrate with Nvidia Enterprise software -- and these blueprints allow customers to develop their own AI agents. So Nvidia is setting itself up to win as this new era of AI growth unfolds.
All this means that buying Nvidia stock at the start of February could boost your portfolio in the weeks to come, but even more importantly, over the long term. And that's why this stock is a no-brainer AI buy right now.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
