Is Nvidia a Must-Buy AI Stock Before 2026? A Deep Dive into Valuation, Competitive Moats, and Infrastructure Tailwinds

The artificial intelligence (AI) revolution is reshaping global industries, and no company has emerged as a more dominant force than NVIDIA. As the clock ticks toward 2026, investors are grappling with a critical question: Is Nvidia a must-buy stock for long-term growth? To answer this, we must dissect its valuation, assess its unassailable competitive moats, and evaluate the infrastructure tailwinds fueling its trajectory.

1. Valuation: A Compelling Case for Undervaluation

Nvidia's financial performance in 2023–2024 was nothing short of extraordinary. Its data center business alone generated $47.5 billion in revenue in 2024, a 217% year-on-year surge, driven by insatiable demand for AI chips and cloud computing solutions according to the company's Q3 2026 financial results. Gaming revenue also grew by 15% to $10.4 billion, while net income skyrocketed from $2.8 billion in 2020 to $29.8 billion in 2024 as reported in the same results.

Despite these metrics, the stock remains undervalued. A recent intrinsic value analysis by a reputable financial institution estimates Nvidia's fair value at $215.64 per share, a 18% discount to its current price of $176.44 according to AlphaSense. Analysts project even stronger upside, with a $250.93 one-year price target (36% potential gain) and a $170 billion revenue forecast for fiscal 2026 as reported by Yahoo Finance. These figures suggest the market is underestimating the company's ability to monetize its AI leadership.

2. Competitive Moats: Dominance in AI Hardware and Ecosystem

Nvidia's dominance in AI is not accidental-it is built on three pillars: technological leadership, ecosystem lock-in, and a self-reinforcing innovation cycle.

• Market Share and Product Leadership: As of late 2025, Nvidia commands over 90% of the AI chip market, powered by architectures like Blackwell and Hopper according to financial analysis. Its Blackwell GPU, launched in March 2025, generated billions in sales within its first quarter, with products sold out as reported by industry analysts. The Rubin chip, set for 2026, will further cement its lead.
• Ecosystem Lock-In: The CUDA platform is a critical moat, enabling developers to optimize AI workloads for Nvidia hardware. Over 90% of cloud-based AI workloads rely on Nvidia GPUs as noted in industry reports, creating a network effect that rivals like AMD and Intel struggle to replicate.
• R&D and Financial Strength: Nvidia's R&D spending in fiscal 2025 totaled $12.9 billion (9.89% of revenue), nearly double that of its closest competitor according to financial modeling data. With a $37.6 billion cash reserve and a 66% EBITDA margin, the company can fund its Blackwell-Rubin pipeline, which has $500 billion in backlog as detailed in industry reports.

3. Infrastructure Tailwinds: AI's $4 Trillion Boom and Government Support

Nvidia's growth is not just driven by demand-it is accelerated by structural tailwinds in infrastructure and policy.

• AI Infrastructure Spending: Global AI infrastructure investments are projected to reach $4 trillion by 2030, led by tech giants like Microsoft and Amazon according to market research. Nvidia's data center segment, already generating $51.2 billion in a single quarter, is positioned to capture a lion's share of this growth.

• Government Partnerships: The U.S. Department of Energy and Oracle are collaborating with Nvidia to build Solstice, a 2,200 exaflop AI supercomputer powered by 100,000 Blackwell GPUs as reported in official announcements. Meanwhile, the National Science Foundation and Nvidia are investing $152 million in open-source AI models for scientific research according to official statements. These projects align with the Trump administration's AI Action Plan, ensuring regulatory and funding support.

• Robotics and New Frontiers: The humanoid robot market, expected to grow at 36.2% CAGR until 2034, relies heavily on Nvidia's AI chips according to market forecasts. This diversification reduces reliance on any single sector.

4. Risks and Mitigants

No investment is without risk. Nvidia faces challenges such as U.S.-China trade tensions and AI bubble concerns. However, its strategic advantages mitigate these:
- Trade Resilience: Despite H200 chip sales to China being approved, Nvidia's U.S. data center revenue (88% of total revenue in fiscal 2025) according to financial modeling insulates it from geopolitical volatility.
- Margin Stability: A 30% operating margin and $37.6 billion in cash provide financial flexibility to navigate downturns as reported by Yahoo Finance.

Conclusion: A Must-Buy for the AI Era

Nvidia's combination of undervaluation, unassailable competitive moats, and explosive infrastructure tailwinds makes it a compelling long-term investment. With a $20 trillion market cap target by 2030 as projected by market analysts and a $170 billion revenue forecast for 2026 as reported by financial sources, the company is not just riding the AI wave-it is the wave. For investors seeking exposure to the AI revolution, Nvidia is not just a must-buy; it is a must-own.