Nvidia shares are experiencing a bull run like never before, a stock that might have escaped many average investor’s eyes. Last Tuesday the company became the hottest and most valuable stock in the world and some investors did manage to get a slice of the cake.
If we talk about the math a 1,000-dollar investment in 2014 would have given you a staggering 297,600 dollars or 2.4 crore Rupees at the price at which it closed last Wednesday, as per an observation by Morningstar Direct. That is a compound growth rate of 29,660%.
The AI Darling
This comes against the backdrop of Nvidia solidifying its grasp over the AI market as its Graphic Processing Units, or GPU are utilized to power AI systems. The Chipmaker has had a phenomenal bull run where its stock has more than doubled over this year, and previously it had tripled in 2023.
The company has maintained a healthy shareholder return on investment, which in many cases has drastically outperformed the broader market, despite a decline in the stock price in 2022, which prompted numerous major investors to seize the opportunity and acquire shares at reduced prices.
Overpriced Yet?
Although Analysts are of the opinion that the stock is now in the over-prized zone and has been there for a long time now, which certainly worries the investors who entering the pool currently, and with the stock creating consecutive highs those calls are getting louder. Nvidia has surpassed the market capital of 1 trillion dollars and is now the sixth public company in the world valued at over $1 trillion, joining Apple, Saudi Aramco, Microsoft, Alphabet and Amazon.
S&P 500 is an index and just like any other index it has the weight of all the companies it encompasses thus its total value is calculated by its market capitalization. Companies like Nvidia are big giants in the industry and a surge or dip in their momentum can cause an impact on the movement of the overall index, as well as impacting the performance of the overall wider market. This could be trouble for individuals involved in hasty buying and selling of index funds.
Still Optimistic
However, as outlined by Morningstar analysts earlier this year, there are compelling reasons for optimism. The largest tech companies globally continue to procure chips from Nvidia, while numerous other firms are intensifying their investments in AI.
“It would not surprise me if a year from now, this is a thousand-dollar stock or more,” Morningstar equity strategist Brian Colello said back in February.
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