Stock market

If I had put £5,000 into Nvidia stock at the start of 2024, I would now have

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Nvidia (NASDAQ: NVDA ) stock has become synonymous with the artificial intelligence (AI) boom. And with good reason, too, as the firm controls about 90% of the AI ​​chip market, by most estimates.

After the November 2022 release of ChatGPT, which was trained using thousands of Nvidia graphics processing units (GPUs), the stock rocketed. It ended up being about 239% higher in 2023!

But how much would I have today if I had invested £5k in stocks at the start? This Sal let’s take a look.

I will be well ahead.

The share price ended 2023 at $495. As I write, it’s at $796, which represents a 61% increase.

This means my five major investments will now be worth around £8,050 on paper. good

Nvidia also pays a dividend, but it’s so low it’s hard to calculate. No investor is buying shares of a world leader in AI computing for profit!

Unprecedented growth in scale

The growth rate at Nvidia last year was truly breathtaking. In fact, I’ve never seen anything like it from an already huge company. And I’m not sure we’ll see anything like that again.

Income Operating profit
FY 2025 (Forecast) $112bn $72.8bn
FY 2024* $60.9bn $37.1bn
FY 2023 $27bn $9bn
*Nvidia’s fiscal year ended at the end of January.

As we can see, the firm expects to more than quadruple its revenue in three years. And increase its operating profit by almost 700 percent.

Last year, its data center business generated revenue of $47.5bn, compared to $15bn the previous year.

What exactly is fueling this insane growth?

Well, like the cloud computing giants AmazonGoogle and Microsoft Thousands are lining up to get their hands on the firm’s data center GPUs. These are used to train and power their large language models (LLMs).

Basically, we’re in the middle of an AI ‘arms race’ and Nvidia is selling ammo from all sides. It is struggling to keep up with demand.

I had concerns.

Given this, it may come as a surprise to learn that I offloaded my Nvidia shares last month. I do so with a heavy heart because I think this is clearly one of the greatest firms in the world.

But when I sold, Nvidia had become a $2.2trn company. If the stock rose another 200%, the firm’s market cap would be greater than that. apple And Microsoft shared.

Even after the rally in Nvidia’s share price, it’s still widespread today.

However, it didn’t sit well with me. Apple and Microsoft currently have strong fundamentals in terms of recurring revenue. In fact, I see both of these companies as predictable tech utilities.

Consequently, I think their earnings are very unlikely to fall off a cliff, like Nvidia’s at some point if the AI ​​frenzy dies down. So I cashed out.

All eyes on guidance

Of course, I may regret my decision. Analysts see the firm growing its earnings at an annual rate of 35% over the next few years.

If it achieves this, we could see it become the world’s largest company by market cap.

Next up for Nvidia investors is the forward guidance provided in Q1 results on May 22. This will almost certainly dictate where the share price goes next.

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