Nvidia Stock Averages 63% Annual Gains Amidst Breakneck Growth

Nvidia (NVDA), the semiconductor giant, has been on a tear, with annual gains averaging 63% over the past decade. If you invested $10,000 in Nvidia 15 years ago, it would be worth around $7.5 million today, assuming dividends were reinvested.

Despite its steep price-to-sales ratio of 17 and high P/E ratio of 24, Nvidia's growth prospects are too enticing to pass up. The company has pivoted from gaming chips to AI-focused data center chips and boasts the dominant AI ecosystem.

Nvidia's recent second-quarter results were impressive, with revenue increasing 106% year-over-year to $96 billion, driven by a 117% increase in data center revenue. This represents about 93% of total revenue. Nvidia also announced a $12.9 billion acquisition of AI specialist Hugging Face.

Nvidia CEO Jensen Huang believes that AI has reached its inflection point, with demand accelerating and compute driving revenue. Despite the company's breakneck growth, its valuation doesn't seem overvalued, with key ratios well below their five-year averages.