Nvidia (NASDAQ: NVDA) has been a driving force behind many investors’ journeys to wealth in recent times. The leading technology company, propelled to the forefront by its artificial intelligence (AI) chips, has witnessed an astonishing 400% surge in its shares in under 14 months. For instance, an initial investment of $50,000 in Nvidia at the beginning of this period would now be valued at around $250,000.
Investors have flocked to Nvidia due to the company’s dominant position in the AI market, encompassing an impressive share of more than 80%. With the AI narrative only in its nascent stages, there appears to be ample potential for further growth. Could this trajectory signify Nvidia’s potential to pave the way for investors to attain millionaire status, even after its remarkable upsurge? Let’s delve deeper and explore.
Image source: Getty Images.
Nvidia’s Origins in Gaming
Nvidia has a rich history and initially made its mark in the realms of gaming and graphics. The company’s graphics processing units (GPUs), designed to handle numerous tasks simultaneously, found a niche in applications requiring high-speed and visually striking imagery.
However, GPUs proved to be revolutionary for other sectors as well—a pivotal component in powering AI. Nvidia’s GPUs stand out as the fastest in the market, with customers leveraging them for “deep learning,” involving the assimilation of colossal data quantities into AI models in order to execute intricate tasks and address challenges.
In addition to chips, Nvidia provides comprehensive platforms that grant access to AI capabilities for companies and developers, with certain solutions tailored to specific industries. One such instance is the BioNeMo generative AI drug discovery platform designed for pharmaceutical and biotech enterprises. Moreover, Nvidia has entered into strategic partnerships with major cloud companies such as Amazon‘s Amazon Web Services (AWS) and Microsoft Azure, making its solutions accessible on their platforms.
Consequently, Nvidia has witnessed a steep climb in earnings in recent times. For instance, in the third quarter of the fiscal year, the company reported a triple-digit surge in revenue, reaching an all-time high of over $18 billion, with net income soaring by approximately 1,000% to surpass $9 billion. Notably, data center revenue, inclusive of Nvidia’s AI products and services, accounted for the majority, hitting a record high of over $14 billion.
The Race for the Swiftest Chip
While competitors, including Advanced Micro Devices, as well as Nvidia’s own partners like AWS, have developed AI chips, Nvidia’s offerings continue to outpace the rest. The company persistently channels investments into research and development, a factor that should reinforce its leadership position.
Consequently, while intermittent slowdowns in growth may be anticipated, it is unlikly to evolve into a prevalent trend. Instead, Nvidia’s prominent position, extensive array of AI products and services, and emphasis on R&D are expected to propel revenue growth in the forthcoming years, further bolstering the company’s share price.
So, circling back to our initial inquiry—Can Nvidia make you a millionaire? It’s improbable that a single stock on its own can yield millionaire status unless a substantial investment is made in that player, and the stock undergoes a monumental upsurge. Such a leap comes with substantial risk, and I would caution against it, even if a stock appears promising. The more realistic path to achieving millionaire status involves investing in a diversified portfolio of high-quality stocks—potentially 20 or more over time—and holding onto them for the long haul.
By adopting this approach, with Nvidia as a probable constituent, there is a foreseeable path to attaining millionaire status over time. Even if this milestone isn’t reached, there is a substantial likelihood of significant wealth accumulation. Ultimately, this implies that investing in the AI behemoth Nvidia, post its stellar winning streak, is likely to be a decision bereft of regret.
Should you invest $1,000 in Nvidia right now?
Before purchasing Nvidia stock, it’s prudent to consider the following:
The Motley Fool Stock Advisor analyst team recently pinpointed what they believe to be the 10 best stocks for investors to acquire at present, and Nvidia wasn’t among them. The identified 10 stocks might yield substantial returns in the coming years.
The Stock Advisor service provides investors with an accessible blueprint for success, offering guidance on constructing a portfolio, regular updates from analysts, and two new stock selections each month. Since 2002, the Stock Advisor service has more than tripled the return of the S&P 500*.
See the 10 stocks
*Stock Advisor returns as of February 12, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
