Key Points
Nvidia’s data center revenue suggests that it is the most dominant player in the semiconductor market.
The company has been clocking outstanding growth despite its high revenue base, a trend that analysts believe will continue.
Nvidia’s earnings growth potential and valuation suggest that the stock could jump impressively over the next five years.
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The semiconductor industry is benefiting from the terrific demand for artificial intelligence (AI) chips. Nvidia (NASDAQ: NVDA) has been one of the biggest beneficiaries of the phenomenal growth in this sector in recent years.
Nvidia’s dominance in the graphics processing unit (GPU) market has led to strong growth in the company’s revenue and earnings in recent years. I think Nvidia will continue to dominate the AI chip market, despite the emergence of challengers such as Advanced Micro Devices (NASDAQ: AMD) and Qualcomm (NASDAQ: QCOM).
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Let us look at the reasons why.
Image source: Nvidia.
Nvidia has significantly higher AI semiconductor revenue than its rivals
AMD and Qualcomm have been gaining traction in the AI chip market lately. However, Nvidia continues to dominate them. Nvidia’s data center revenue stood at $75.2 billion in the first quarter of fiscal 2027, which ended on April 26, 2026, according to recent research from The Motley Fool. The report adds that Nvidia’s data center revenue increased by 92% year over year during the quarter.
The Motley Fool also notes that AMD’s data center revenue totaled $6.7 billion in its most recent quarter. This segment’s revenue increased by 107% year over year. The important thing to note is that Nvidia’s data center business grew at a healthy clip despite its significantly higher revenue base than AMD’s.
Qualcomm is just getting started in the data center business. It anticipates $15 billion in data center revenue in fiscal 2029, which is just 20% of what Nvidia generated in the last reported quarter. What’s worth noting is that Qualcomm is targeting the fast-growing AI inference market, but Nvidia is the dominant player in this niche. The chip giant controls an estimated 74% of the market for AI inference chips.
Nvidia’s share of the overall AI chip market is reportedly in the 80% to 90% range, according to Silicon Analysts. As the market for AI chips is expected to reach $2 trillion in 2030, according to AMD, Nvidia’s strong market share in this segment suggests its data center business could grow significantly over the long run. That’s likely to be the case even if Nvidia were to cede some of its market share to rivals.
The earnings growth potential and valuation make Nvidia the better buy
The data tells us that Nvidia is the best semiconductor stock to buy for anyone looking to capitalize on AI-fueled growth in this market. There are a couple of additional reasons why I think Nvidia is a better buy than AMD or Qualcomm in 2026.
First, Nvidia’s earnings will keep increasing at a solid clip over the long run, according to YCharts.
Data by YCharts
The chart above shows that AMD is expected to post a stronger earnings jump. But investors should note that they will have to pay a significant premium to buy AMD stock.
Data by YCharts
Qualcomm’s earnings growth, meanwhile, clearly suggests that it isn’t going to be a match for Nvidia in the semiconductor industry over the long run. The tepid earnings growth that Qualcomm is anticipated to deliver also explains why it trades at cheap multiples.
The 44% annual long-term earnings growth Nvidia is estimated to deliver (as per YCharts) can take its earnings per share to $29.53 after five years (using its fiscal 2026 earnings of $4.77 per share as the base). If Nvidia trades at 21 times earnings in fiscal 2031, in line with the S&P 500 index’s forward earnings multiple, its stock price could reach $620.
That price target points to potential gains of nearly 3x, making Nvidia an ideal AI stock to buy and hold for the long run due to its robust growth prospects and attractive valuation.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.
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