This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Key Points
- Nvidia's incredible growth is largely the result of robust demand for its data center GPUs.
- The business has been the best way for investors to gain exposure to the growing interest in all things AI-related.
- A valid argument can be made that the stock still presents a good buying opportunity.
Nvidia (NASDAQ: NVDA) has quickly ascended up the ranks to become the world's most valuable enterprise today. It sports a monster market cap of more than $4.32 trillion (as of Sept. 11). The company is valued at $600 billion more than second-place Microsoft.
Long-time Nvidia shareholders feel like they've hit the jackpot. If you'd invested $10,000 in this top artificial intelligence (AI) stock five years ago, here's how much you'd have today.
Demand is through the roof
This is one of the best-performing stocks on the planet. In the past five years, shares have catapulted 1,340% higher. Had you been smart enough to invest $10,000 in Nvidia in September 2020, you'd have a jaw-dropping $144,080 today. That's an incredible gain in a relatively short time.
The company has been thriving as its customers build out the technical infrastructure needed to develop AI models. Demand for Nvidia's data center graphics processing units is insatiable. Revenue increased 12-fold between the second quarter of fiscal 2021 and fiscal 2026's Q2 (which ended July 27). Consensus analyst estimates forecast a 35% compound annual growth rate between fiscal 2025 and fiscal 2028.
Is Nvidia a smart buy now?
After such an impressive gain in recent years, it might be crazy to think that Nvidia still presents investors with a smart buying opportunity. However, that just might be the case today, even though the stock is just 3% below its record high.
Shares trade at a forward price-to-earnings ratio of 39.6. This looks totally reasonable when you consider the fact that Nvidia's net income increased at an annualized pace of 112% in the past five years. By being the dominant pick-and-shovel provider during the AI revolution, Nvidia is experiencing unbelievable success.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
