This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Everyone wants to retire a millionaire. But many will never realize that vision. How do you make sure this future happens to you? Find great companies to invest in for decades at a time.
Right now, the artificial intelligence (AI) revolution is creating some of the biggest growth opportunities in history. Could Nvidia (NASDAQ: NVDA) stock be your secret to a wealthy retirement? You might be surprised by the answer.
Nvidia's growth journey has just begun
Over the past few years, Nvidia's revenues have exploded higher, and not from a small base, either. In 2023, the company was bringing in less than $40 billion in sales. Today, annual sales have exceeded $130 billion, with the end of this growth trajectory nowhere in sight.
That's because, in many ways, the AI revolution has just begun. And that's great news for Nvidia, considering its GPUs -- critical components for training and running AI models -- are widely considered best in class right now.
According to global consultancy McKinsey & Co., investments into new AI software and services has gone gangbusters in recent years. "Equity investments in generative AI jumped from $5 billion in 2022 to $36 billion in 2023," one of the firm's recent reports revealed. The numbers for 2024 are likely significantly higher.
The firm's low estimate has AI Software and Services revenue growing from $85 billion in 2022 to $1.5 trillion in 2040. Its high estimate sees industry revenue surpassing to $4.6 trillion by 2040. In other words, the pace of revenue growth for the AI sector from here on out is expected to be like nothing we've ever seen before.
I've written before about how Nvidia's CUDA developer suite has created a vendor lock-in effect that could help it sustain dominant market shares for AI GPUs for years, if not decades, to come. All of this put together means that Nvidia will be selling into a rapidly growing, truly gigantic market with an industry-leading product that developers need for their innovation to become reality. It really is an incredible position to be in -- a major reason why Nvidia's valuation has soared into the trillions of dollars.
To be fair, Nvidia stock is quite expensive on paper. It's surprising to see a trillion-dollar business garner a price-to-sales ratio of 21.6. That's typically been considered a lofty multiple, even for significantly smaller companies.
NVDA PS Ratio data by YCharts
Will this stock make you a millionaire?
This begs the question: Is Nvidia stock still a buy today? You may be surprised by the answer.
Over the short term, anything is possible with Nvidia stock. High multiple market darlings like this are prone to erratic shifts in market sentiment. In early 2025, we experienced such a swing, with hundreds of billions of dollars wiped off Nvidia's valuation over a matter of days, with Chinese start-up DeepSeek announcing a chatbot created with cheaper chips.
But here's the thing: Retiring rich doesn't typically happen overnight. It also doesn't happen by finding a single worthy investment. Retirement investing is a long game, where you stack the magic of compound interest in your favor. That is, you must fill your portfolio with companies that can grow your money consistently over time. That requires long holding periods and a level of patience few possess.
Nvidia stock is undoubtedly expensive. But long stretches of growth can make almost any multiple look attractive in hindsight. The company has a durable competitive advantage due to vendor lock-in, and its end market growth will be incredible to watch, even at the low end of estimates.
Those looking to retire rich should consider adding Nvidia shares to their portfolio today. But don't forget that it will be time, and likely a well-balanced portfolio, that will lead to the best results come retirement.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
