Finance

In a few years, you’ll wish you bought this high-growth stock


Many investors find it difficult to buy a stock after it has already risen significantly. Nvidia (Nasdaq: NVDA) Certainly falls into this category. Its shares have soared 515% since the start of 2023.

This is because with the rise and development of artificial intelligence (AI), its data center business has experienced explosive growth. Generative artificial intelligence applications Continuing its rollout, Nvidia is the leading provider of the high-performance computing power platforms it requires.

Nvidia’s sales grow explosively

NVIDIA’s stock price soared as revenue from its data center business grew rapidly. As of January 28, Nvidia’s revenue from this business in the fourth quarter of fiscal year 2024 was US$18.4 billion. By comparison, the segment’s revenue as of Jan. 28 was $15 billion. Throughout fiscal year 2023So it’s no surprise that the company’s stock price is rising.

The sharp rise in the stock price has some investors wondering whether they missed an opportunity and whether it’s too late to buy Nvidia stock. But those sales also translate into profits. Diluted earnings per share (EPS) for the most recently reported quarter soared 765% year over year. And there’s every reason to believe there’s more to come.

Beyond the “Seven Heroes”

Nvidia’s chips are in such high demand across so many industries and geographies that the company has to prioritize certain customers. The deepest-pocketed high-growth tech stocks – known as part of the “Big Seven” – have been replaced by a group of high-growth tech stocks. The chart below shows the tech companies that spent the most on Nvidia H100 graphics processing units (GPUs) last year.

Bar chart showing projected Nvidia H100 GPU shipments in 2023.

Image source: Statista.

But the uses of artificial intelligence are growing, and the technology is still in its early stages. At last month’s Nvidia GTC (GPU Technology Conference), CEO Jensen Huang said that the first achievement is to “bridge the technology gap” and make the technology accessible to ordinary people. The next achievement may require expanding supply to more buyers for more industry uses.

Next generation artificial intelligence technology

At the same conference, Nvidia unveiled its latest artificial intelligence technology. Its new Blackwell AI platform is expected to be used by automakers for advanced data centers and cloud infrastructure, as well as other AI supercomputing needs. As a result, buyers of Nvidia stock will now see more sales to an increasing number of customers.

As for missing out on this stock’s big run, just look at how its valuation has changed as sales have exploded and profits have increased. Even though the stock is up more than 500%, its forward price-to-earnings (P/E) ratio has declined.

NVDA ChartNVDA Chart

NVDA Chart

Nvidia stock’s downward valuation trend is bound to continue, as its financial performance continues to surprise investors to the upside. It is a leader in a rapidly growing field. Clearly, the demand is there.

In this case, investors shouldn’t think they’re missing out on gains. Nvidia stock may not return 500% again in the next 18 months. But in a few years, it may still be a valuable holding in any portfolio.

Should you invest $1,000 in Nvidia right now?

Before buying Nvidia stock, consider the following factors:

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John Mackey, the former CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, sister of Meta Platforms CEO Mark Zuckerberg, Facebook’s former director of market development and spokesperson, is also a board member. Suzanne Frey is a senior executive at Alphabet and a board member of The Motley Fool. Howard Smith Holds shares of Alphabet, Amazon, Microsoft, Nvidia and Tesla. The Motley Fool holds and recommends Alphabet, Amazon, Baidu, Meta Platforms, Microsoft, Nvidia, Oracle, Tencent and Tesla. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 Microsoft calls and short January 2026 $405 Microsoft calls. disclosure policy.

In a few years, you’ll wish you bought this high-growth stock Originally published by The Motley Fool



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