The American chip giant that appeared last year Nvidia (NASDAQ: NVDA) has already had a great 12 months. Business growth has been excellent, and Nvidia stock has been a market darling. Many investors were somewhat skeptical about what things would look like last year.

However, from the beginning of 2025 to around the end of December, Nvidia shares rose 39%.

With a market capitalization of a staggering amount4.5 trtoday it is not only the most valuable listed company; Nvidia is also the most valuable publicly traded company in history.

The burden of expectations falls on many companies. But would it be possible for the company’s stock to do it again and post another stellar performance in 2026?

Reasons for optimism

I think it’s possible.

Nvidia did not become the largest company on the US stock exchange simply thanks to an attractive sales offer and a wave of hype around artificial intelligence.

She spent decades designing chips. Industry knowledge, original projects and deep experience determine our competitiveness.

The company was a huge success even before artificial intelligence became popular.

Success is not a coincidence

Nvidia was in the right place at the right time not by accident, but thanks to a carefully crafted and executed corporate strategy that consistently delivered mighty performance for its business for several decades.

It is now an extremely profitable cash flow generating business.

In the most recent quarter, revenue grew 62% year-over-year to $57 billion. Free cash flow from operations increased 35% to $24 billion.

These are huge numbers and a stellar growth rate.

The size of operating cash flow relative to revenue also indicates that Nvidia’s business model has the advantage of offering high profit margins.

The event will be continued in 2026

Sure, business is mighty.

Nvidia has carved out a unique position in the chip industry. With its shipping history, gigantic installed base and world-leading expertise, I expect it will continue to perform well.

But the growth story carries risks.

First, AI spending may decline from the boom we’ve seen over the past few years. For example, companies may decide that the business case for massive AI spending is not mighty enough to justify it.

Can high sales prices continue?

Another risk is that a competitor might come up with a competing chip design that brings Nvidia’s great capabilities at a fraction of the price.

This has been a consistent feature of how many technology markets have developed in the past, with initially high selling prices falling over time as technology became much cheaper.

Currently selling for 46 times earnings. I don’t think Nvidia stock gives me an adequate margin of safety for this risk.

So, while I believe Nvidia’s stock price could soar again this year, I have no plans to invest at current levels.