NVIDIA (NVDA) plans to stay ahead.
For about five years now, NVIDIA’s stock has been one of the hottest assets on the market, generating a roughly 2,200% return and a 40x cumulative stock split.
Most of this growth has been due to NVIDIA’s place at the heart of the biggest technologies of the past 15 years. The company makes programmable specialty chips that power some of the fastest-growing areas in tech, from AI to cloud computing. What’s more, currently NVIDIA remains arguably the only company in the world that makes these chips at high quality and scale.
This has made an already successful company wildly valuable, and has made its investors quite a lot of money. In fact, if you had invested $10,000 in NVIDIA’s stock on January 1, 2020, you would have about $238,560 today. This is a case of how holding your investments over time can be so important. NVIDIA is arguably the biggest example of a good company that needed time to truly find its niche, but today it has become one of the stock market’s biggest success stories. Here’s why.
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A Brief History of NVIDIA
NVIDIA makes specialty processing chips commonly called “graphics cards” or GPUs. They are internal processors, like the CPUs at the heart of all computer. However, where a CPU is a generalized chip built to handle many mid-complexity tasks simultaneously, a GPU is a specialized chip built to handle one, extremely complicated task at a time.
For the first several decades after NVIDIA was formed, the most common use for this kind of processor was in displaying, editing and manipulating graphics. Most of NVIDIA’s customers were either in professions like digital editing and graphic design or were individuals who played high-end computer games. This is why these chips are called “graphics cards.”
Over these years, NVIDIA grew to dominate its market. This was due to several factors, chief of which was the company’s reputation for high-quality products and the relatively niche scale of graphics card buyers. The market didn’t need many specialist GPU makers, and NVIDIA excelled.
But NVIDIA’s single-purpose processors could always handle much more than graphics, and in the mid-2010s new industries began emerging that needed the kind of intensely focused processing these chips specialize in. Cloud computing, streaming, blockchain and AI all work by processing massive amounts of data in service of individual problems. Cloud computing requires massively complicated calculations to find a single file among terabytes of data, for example, while artificial intelligence at its most basic is an incomprehensibly vast guess-and-check algorithm.
This began a golden era for the already-successful company, as incredibly valuable companies built their products on chips that, to a very large extent, only NVIDIA could provide. Since the mid-2010s NVIDIA has grown from a successful niche manufacturer to one of the most valuable tech companies in the world.
NVIDIA’s Stock Over Time
The company’s stock price has reflected its success.
NVIDIA’s stock climbed from around $236 per share in January, 2020 to $800 per share in June, 2021. This led the company to issue a 4x stock split, quartering its share price in exchange for quadrupling the number of shares per investor. (During a stock split, the company issues new shares of stock on a per-multiple-basis. For example, in a 4x stock split, each shareholder receives three new shares of stock per share they own, so they end up with 4 shares for each 1 share they owned before the split.)
This took NVIDIA’s stock price back down to around $200. It climbed back up to nearly $1,100 by May, 2024 which led the company to issue another share split, this time at a whopping 10x ratio. That brought prices back down to around where they are at time of writing, when investors can buy NVIDIA stock for roughly $142 per share.
Investors should note that stock splits can make the company’s stock ticker somewhat confusing to read. For example, a standard stock ticker will tell you that NVIDIA was worth around $5.90 in January, 2020, rather than the actual trading price of $236. This is because tickers are retroactively adjusted after a stock split. They reflect the company’s price-per-share based on the firm’s market capitalization relative to how many shares are currently in circulation. Since there are approximately 40 times more shares of NVIDIA in circulation now as in January, 2020, stock tickers display 1/40th the share value that they did five years ago.
To put this in perspective, say that you invested $10,000 in NVIDIA on January 1, 2025. Your investment would have (very broadly) tracked as follows (all numbers approximate):
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January, 2025: Share price $238 = $10,000 / $238 = 42 shares
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July, 2021: 4-1 Stock Spilt = 42 Shares * 4 = 168 shares
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June, 2024: 10-1 Stock Split = 168 shares * 10 = 1,680 shares
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Current Share Price: $142 = 1,680 shares * $142 = $238,560
Your original $10,000 would have purchased 42 shares of NVIDIA. After a cumulative 40-1 stock split, you would have 1,680 shares today. At a current price of $142 per share, your investment would be worth around $238,560. This is growth of around 2,200% to 2,300%. If you held this in a 401(k), you might have about $189,207 of income to spend after taxes. In a Roth IRA, of course, you could spend the entire amount tax free.
Consider speaking with a financial advisor about your portfolio allocations and how you can work toward your goals.
How Does NVIDIA Fare Against the Market?
More than anything else, NVIDIA is a lesson in the power of long-term investing. Investors who jumped in several years ago might have been tempted to bail out at several different occasions. Sometimes, this might have meant cashing out on the highs. It also might have meant jumping ship after the lows. NVIDIA is a single-asset equity, after all. It has been volatile. From November, 2021 to September, 2022, for example, the company lost almost two-thirds of its value, falling from $326 per share to $121.
But holding this stock has proven wise. In recent years, NVIDIA is one of a handful of stocks that has not only beaten the market, it has helped define it. The S&P 500’s five-year return at time of writing was around 82.05%. That is a solid return, and well above historical averages (which would suggest a five year return of 55%). It’s peanuts compared to NVIDIA’s 2,200% return though.
What’s more, NVIDIA is on firm ground even compared to many of its peers. In recent years, investors have begun talking about the Magnificent 7 replacing the FAANGM stocks (although the only change is the addition of Tesla). These seven companies collectively make up around of fifth of the stock market’s entire value, and are: Facebook (Meta), Apple, Amazon, Microsoft, Google (Alphabet), Tesla and NVIDIA.
None have posted returns anywhere close to NVIDIA’s in this timeframe. This is not to suggest they have underperformed. In fact, all of these stocks have performed well above the market, in most cases generating five-year returns of between 130% and 200%. Tesla comes in a strong second, with five year returns of 1,161%. All of these dramatically, if not vastly, exceed the market. However even Tesla’s five-year returns as of January, 2025 are about half of what NVIDIA has posted, while the rest of these companies have grown at roughly 10% the rate of their rival.
If you have questions about individual investments like NVIDIA, speak to a financial advisor.
The Bottom Line
NVIDIA is one of the fastest growing companies on the stock market. With five-year returns over 2,200%, the company has grown dramatically faster than even its biggest rivals. And with entire industries depending on its hardware, NVIDIA plans to keep that growth going.
Tips On Tech Investing
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Regulation has become one of the biggest watchwords in tech. As the industry matures from its heyday of wealthy startups into its current phase of established market leaders, government regulators will continue to pay ever more attention to how these companies do business. For investors, that can have both benefits and risks.
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Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
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