Nvidia's Decade-Long Bull Run: 13,900% Return Outpaces S&P 500
Nvidia's (NVDA) stock has been a game-changer for investors who held on to it over the past decade. What started as a graphics chip manufacturer for gamers eventually transformed into a leader in artificial intelligence (AI). The company's pivot began with CUDA in 2006, which turned GPUs into general-purpose parallel computers.
As AI adoption grew, Nvidia's chips became essential for training and running AI models. The launch of ChatGPT in 2022 further solidified the company's position as a key player in the industry. Today, Nvidia sits at the center of a $2 trillion-plus cloud backlog, with hyperscaler capex projected to hit nearly $800 billion in 2026.
Investors who put $1,000 into NVDA stock in 2017 would have seen their investment grow by over 13,900% by 2027. This outperformed the S&P 500 (SPY) return of 255% during the same period. However, Nvidia's stock price plummeted by more than 50% in 2022 due to market volatility.
Nvidia's CEO Jensen Huang is optimistic about the company's future, projecting a 70% revenue growth in fiscal 2028. He believes AI has reached an inflection point and that compute is now revenue. However, some analysts are skeptical, citing concerns over Google's custom AI chips and Nvidia's dependence on China data center revenue.
The stock's forward price-to-earnings ratio is around 24, which is not demanding if the growth lands but very demanding if it does not. Past returns are unlikely to be repeated in the future.