Nvidia: The Top AI Stock to Buy in July

As we reach the halfway mark in 2025, artificial intelligence (AI) remains a dominant theme in the market. Despite the hype, the reality is that there has never been a larger investment theme. Most AI hyperscalers are projecting record capital expenditures for 2025, primarily focused on expanding their cloud computing capacity for AI applications. This expansion will significantly benefit one company more than any other: Nvidia (NVDA).

Nvidia has been the top AI stock pick for several years and continues to be a strong choice for the future. But is it the best AI stock to buy in July?

Data center growth is far from over. Nvidia manufactures graphics processing units (GPUs) — chips originally designed for generating high-quality graphics in video games. These chips excel at handling the types of computations that can be broken down into many small tasks, making them ideal for training and running AI models. Nvidia has competitors in the data center GPU market, but none come close to its technology and supporting products. Most estimates peg its market share in that niche at around 90%, which is incredible considering the substantial amount of money spent on data centers.

Data center spending is projected to skyrocket over the next few years. During his keynote at Nvidia's 2025 GTC developer event, CEO Jensen Huang cited a third-party estimate that data center capital expenditures totaled $400 billion in 2024. Nvidia generated $115 billion in data center revenue during its fiscal 2025, which encompassed most of 2024. The same estimate forecasts that data center capital expenditures will rise to $1 trillion by 2028. If Nvidia can maintain its share of these expenditures, its revenue would more than double over that period. This presents a bullish case for Nvidia stock.

AI computing capacity is far from being fully built out to the degree that the tech sector expects, which keeps the story behind Nvidia's stock intact. However, is the stock priced at a reasonable level for new investors to capitalize on future growth?

There's a common notion that Nvidia's stock has become quite expensive, but that's no longer the case. It trades today at 36 times forward earnings, which is in line with some of its big tech peers. Microsoft and Amazon trade for 37 and 34 times forward earnings, respectively. During their most recently reported quarters, Microsoft grew its revenue at a 13% pace, while Amazon grew at a 9% pace. Nvidia is growing at a faster rate than they are.

While Nvidia may not be cheap, its valuation is hovering around the same levels as its big tech peers. If its data center GPU sales grow at the rates it expects, the price today will be inconsequential years down the road. Therefore, I'm confident in labeling Nvidia as the best AI stock to buy in July.