Nvidia (NASDAQ: NVDA) has been under the spotlight lately due to its execution of a 10-for-1 stock split in mid-June, turning heads and portfolios with its shareholder-friendly move. While the ripples of the split settled quickly, there’s much more beneath the surface that makes Nvidia a standout in the financial landscape.
Image source: Getty Images.
Nvidia’s Monumental Value
If you thought Apple was big, think again. Nvidia, founded in 1993, has surpassed the $3 trillion valuation mark, making a mark in history with jaw-dropping growth. In a mere 50 days, Nvidia added a staggering $1 trillion to its market value, dwarfing previous valuation milestones.
Rocketing Stock Performance
Nvidia’s stock performance is not for the faint-hearted. While the average stock market return hovers around 10%, Nvidia has smashed records with an average annual gain of 50% over the last 15 years, climbing to 75% in the past decade and achieving a remarkable 104% annual growth in the last five years. In the last year alone, the stock has more than tripled its value, leaving investors in awe.
Nvidia’s Strategic Business Pivot
Once a gaming-chip powerhouse, Nvidia has strategically shifted its focus to data-center-related technology, with a whopping 80% of its revenue now stemming from this segment. This pivot has proven successful as Nvidia’s data center platform plays a pivotal role in fueling artificial intelligence endeavors, reinforcing its standing in the tech industry.
Year | Total revenue, in billions |
|---|---|
Trailing 12 months | $79.8 |
2024 | $60.9 |
2023 | $27.0 |
2022 | $27.9 |
2021 | $16.7 |
2020 | $10.9 |
2019 | $11.7 |
2018 | $9.7 |
2017 | $6.9 |
2016 | $5.0 |
Data source: Morningstar.com, as of mid-June 2024.
The Visionary Leadership of Jensen Huang
Behind Nvidia’s meteoric rise stands co-founder and CEO Jensen Huang, a visionary leader with a remarkable journey. From humble beginnings at a religious reform school in Kentucky to pioneering transformative technology at Nvidia, Huang’s story epitomizes the American dream. His grit and determination, cultivated through menial jobs and unexpected pathways, underscore Nvidia’s ethos of innovation and resilience.
Nvidia’s Distinct Organizational Culture
Unveiling Nvidia’s Financial Odyssey
In many major companies, a CEO typically has a limited number of direct reports. However, at Nvidia, late 2023 unveiled the astonishing fact that Huang managed a whopping 50 direct reports. Huang justified this by stating that “The more direct reports the CEO has, the fewer layers exist within the company… It allows us to keep information fluid, ensures everyone is empowered by knowledge.”
The Near Brush with Bankruptcy
It’s a familiar tale – even the mightiest organizations face daunting challenges. Nvidia’s early years were marred by financial turmoil, with the company on the brink of bankruptcy. Huang reflected on this tumultuous period, remarking, “I think when you build a company from the ground up, and you’ve experienced real adversity, and you really experienced nearly going out of business several times, that feeling stays with you…” He emphasized, “I don’t wake up proud and confident. I wake up worried and concerned.”
Huang further emphasised, “I think during adversity you’re more focused. And when you’re more focused, you could perform better.”
The Case for Investment
Despite Nvidia’s remarkable ascent, the stock may still hold promise for prospective investors. Recent surges have altered its affordability, causing some to question its value relative to other companies. However, for those planning long-term investment, purchasing at current levels may reap substantial rewards even amid potential pullbacks.
Whether contemplating an immediate investment, monitoring Nvidia’s performance, or delaying any decision, one cannot deny the allure of this exceptional company. For cautious buyers, consider adopting a phased investment approach.
Is Nvidia a Viable Investment?
Before diving into Nvidia’s stocks, take heed:
The Motley Fool Stock Advisor team recently pinpointed the top investment opportunities, with Nvidia notably absent from the list. These handpicked stocks are anticipated to generate substantial returns in the foreseeable future.
Reflecting on Nvidia’s previous inclusion on the list back in April 15, 2005, an investment of $1,000 during that period would have burgeoned to $808,105!*.
Stock Advisor presents investors with a comprehensive roadmap to success, offering tailored portfolio strategies, regular analyst updates, and monthly stock recommendations. Since 2002, the service has significantly outperformed the S&P 500, delivering returns that have quadrupled the market’s growth*
*Stock Advisor returns as of June 10, 2024