Breakfast News: To Buy Nvidia or Not to Buy

 

Aug. 29, 2026

Motley Fool Rule Breakers first recommended Nvidia (NVDA -4.58%) at a split-adjusted price of $0.16 in April 2005. Our Breakers team recommended it again in 2009 at $0.39. Since then, we’ve made more than 30 investments and recommendations across The Motley Fool.

Very few public companies deserve to be held for 20+ years. And getting just a few of these right can transform the financial lives of Fools. Thank you, Nvidia.

1. Nvidia’s On a Roll

Nvidia reported second-quarter earnings on Wednesday, and the stock is up 7% since. Revenue grew 106% year over year, the fourth straight quarter of acceleration. Nvidia also locked in hundreds of billions of dollars of memory and advanced packaging through 2032. 

• The valuation remains compelling: Nvidia is worth $5.5 trillion, but it also trades at a forward P/E ratio in the low 20s. That’s well below market averages.
• Management has developed a cash machine: Take just one of Amazon’s (AMZN +3.97%) planned buildouts; it could require 2 million Nvidia chips! Nvidia’s CFO Colette Kress expects the top five hyperscalers to spend nearly $800 billion on capital spending in 2026. In 2027? Over $1.3 trillion.
• Margins and returns on capital are important: Memory prices are climbing, and Nvidia expects gross margins to slip from around 75% to about 72%. And its rate of returns on capital will not sustain these lofty highs. But revenue is projected to 4X over the next decade. 
• Next year’s guidance ahead of Wall Street: Nvidia expects around 70% revenue growth next fiscal year, well above what Wall Street expected. CEO Jensen Huang said supply (not demand) is capping that growth. Nvidia sets the pace for the AI supply chain, and this quarter it raised that pace again.

 

 

2. Nvidia’s $13 Billion Insurance Policy

Nvidia wasn’t finished. A day later it reportedly agreed to buy Hugging Face for $13 billion. While some are calling this a vertical integration story, our Rule Breakers team disagrees. Emily Flippen said this looks like a defensive hedge, and a cheap one. Nvidia can cover the price seven times over with money already earmarked for buybacks.

• The vertical integration argument doesn’t hold: Hugging Face is something like GitHub for artificial intelligence, an open repository where developers publish and download open-source models. It reportedly generates revenue of $150 million a year. You don’t integrate vertically into a business that size.
• Nvidia is defending the front door. Hugging Face is the app store for AI — where developers grab free, open-source models to build on. CEO Jensen Huang shared that nearly all open models today run on Nvidia chips. Hugging Face owns the storefront that can keep customers coming back to Nvidia’s chips. Reports have surfaced that Microsoft, (MSFT +1.68%) which is building its own Maia chips, was engaged in negotiations here, too. For $13 billion, Nvidia keeps the door pointing its way.

3. Back to the Bigger Picture

Think of AI as a new age of exploration. Humanity is pushing toward and into an unknown continent of intelligence. And the most advanced companies and thinkers of our age are blazing ahead with new discoveries, hour by hour, throughout each week.

The leading company explorers, from Anthropic to Alphabet’s (GOOG +1.53%) Google to OpenAI, are racing to claim that continent, and Nvidia builds the ships that carry them there.

But Nvidia’s role runs deeper. It also drew the maps and set the routes, and its instruments became the tools every navigator trusts. When the whole expedition depends on your fleet, you set its pace.

Nvidia is carrying an entire era’s ambitions — to cure cancer, to explore space, to accelerate learning, to invest better.

Much of this is priced in, yes. But how much of it is not?

Team Rule Breakers has a 5-year price prediction of $562.

Team Hidden Gems has upped its 5-year price prediction from $363.04 to $396.28 for Nvidia, an 82% increase from today’s price of $217. 

4. Your Take

How would you rank these large tech companies in terms of your desire to own their stock over the next 5+ years?

Nvidia
Microsoft
Apple (AAPL +1.63%)
Meta (META +1.21%)
Alphabet