This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
One can't compile a list of history's most successful stocks without including Nvidia Corp (NASDAQ: NVDA). Since the company's initial public offering (IPO) in 1999, the stock has risen nearly 300,000%! The majority of that gain occurred over the last 10 years as the advent of cloud computing increased the importance of Nvidia's GPUs.
However, what truly supercharged the stock was the company's dominance in AI chips. The demand for such chips has made Nvidia the leading chip company, leading to a 10-for-1 stock split earlier this year. When combining that with previous splits, even Nvidia's smallest shareholders would own a significant position today.
Nvidia's share growth
Investors who bought one share of Nvidia stock at the IPO would have 480 shares today. The company's stock has split 2-for-1 three times between 2000 and 2006 and 3-for-2 in 2007. No other splits occurred until the pandemic, when demand for Nvidia's GPUs took shares higher, prompting a 4-for-1 split. The AI chip revolution led shares to a massive surge between late 2022 and today, leading to the aforementioned 10-for-1 split.
The financial gains were huge. One share at the IPO cost $12 before the six splits. Today, 480 shares hold a value of around $58,000. Thus, even holding a token amount of Nvidia in 1999 would have brought eye-popping returns.
Putting Nvidia's growth in perspective
Ultimately, Nvidia shows how holding even one share can bring considerable share growth through splits.
Investors shouldn't expect one share of their growth stocks to become 480 shares. Nonetheless, if a company consistently grows revenue and profits by double digits, it's likely to split every few years.
It takes only seven 2-for-1 splits for one share to grow to 128 shares, or just two 10-for-1 splits to turn one share into 100. Such examples show how investing in a successful growth stock early on can lead to exponential share gains over time.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
