Albert Einstein called compound interest “The eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” Coupled with time, compound interest has the power to turn even meager savings into massive wealth.
Had you had the foresight to invest $10,000 in Nvidia (NASDAQ:NVDA) at its initial public offering in January, 1999, for $12 a share and did nothing else after, you would now have $37.3 million with dividends reinvested.
Because Nvidia split its stock six times over the last 26 years, one NVDA share then would have become 480 shares. The split-adjusted price of the stock at its IPO would be worth just $0.025 today.
|
Nvidia (NVDA) Stock Split History |
||
| Date | Split Ratio | Split-Adjusted IPO Price |
| June, 2000 | 2-for-1 | $6.00 |
| September, 2001 | 2-for-1 | $3.00 |
| April, 2006 | 2-for-1 | $1.50 |
| September, 2007 | 3-for-2 | $1.00 |
| July, 2021 | 4-for-1 | $0.25 |
| June, 2024 | 10-for-1 | $0.025 |
Data source:Nvidia SEC filings.
Of course, Nvidia has become a behemoth. The stock trades for $140 per share and the company is valued at $3.4 trillion, making it the second most-valuable stock on the market.
While its growth is nothing short of remarkable, that is all ancient history. What investors want to know is can Nvidia turn them into millionaires if they buy shares today.
24/7 Wall St. Insights:
- Nvidia (NVDA) has been an incredible investment since its IPO, turning a $10,000 investment in 1999 into $37 million today.
- Betting it all on one stock is probably never a good idea, but NVDA has the potential to still mint millionaires in the decades to come.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
A chip for everyone
Nvidia has transformed since its IPO. Its discrete graphics processing units (GPUs) are no longer simply top picks for gaming PCs and consoles, but are today integral to data centers because of their ability to handle artificial intelligence’s complex algorithm needs.
Discrete GPUs are a different from integrated graphics chips because they are separate from the central processing unit (CPU). With their own dedicated memory, they are significantly faster and more powerful, allowing for complicated processing tasks. It is why game developers, crypto miners, metaverse players, and data centers still seek them out.
Nvidia owns the market, too. It has an 88% share of the discrete GPU segment, far ahead of second-place Advanced Micro Devices (NASDAQ:AMD) at 12%.
The chipmaker is now also developing purpose-built GPUs for artificial intelligence. Its latest GB200 Grace Blackwell superchips that were first announced back in March as the successor to its phenomenally popular H100 chip, leapfrog forward on the technological front.
Because they fuse two silicon squares into a single component, they are able to process AI workloads much faster. Importantly, they reportedly deliver 30 times the performance of the H100 while reducing by 25% its energy consumption.
They had been scheduled to be delivered in the fourth quarter of 2024, but a design flaw that saw the chips overheating in data center server racks forced Nvidia to delay their release until early 2025.
Rapidly expanding data center market
Data centers now comprise the core of Nvidia’s business, representing 78% of total fiscal year 2024 revenue. For the past five years, segment revenue has grown at a 75% compound annual growth rate. That’s not likely to slow.
Hyperscalers like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META) are continuously expanding their data center footprint. Meta just announced it is seeking proposals for nuclear reactors to power its data center growth while Dubai-based Damac Group said it wants to invest $3 billion to develop data centers all across Southeast Asia.
Because AI is still in its infancy, there remains a massive runway of growth still to come. Although Nvidia is facing competition from AMD and others, particularly on the price forefront — the Blackwell superchip costs upwards of $70,000 each — the market is expanding at a rapid rate. There is plenty of opportunity for several players to win.
Is NVDA stock the one stock to own?
It is never a good idea to place all your eggs into one basket, and NVDA stock is not cheap at 56 times earnings and 30 times sales. Yet, so long as you are not a short-term trader, Nvidia should generate substantial returns over the years to come.
The chipmaker will continue minting millionaires, though the sort of parabolic growth it experienced previously is a thing of the past. It’s hard for a three trillion-dollar company to grow at such sustained rates.
You might not turn $10,000 into $37 million, but you should still reap a substantial profit over the next decade or two. So I wouldn’t buy only NVDA stock, but it should likely be a good part of your portfolio.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
