Nvidia is a technology companty based in Califonia, USA. They are mostly known for making graphics cards but recently they have been all over the news for their work in AI, which is the stock has shot up in recent years.

As of writing this post Nvidia is at an all time high of 200.11, it’s the highest valued stock in the entire world with a market cap of £3.565 T. The top tree stocks are Google (Alphabet) with a market cap of £3.367 T and Apple with a market cap of £3.084 T.

Of 10,813 companies with a total market cap of £106.067 T. Nvidia alone makes up 3.36% of the entire market. It hit this positions in June 2024 but it has gone up and down since.

Where was Nvidia 10 years ago?

Compared to 10 years ago Nvidia has sky rocketed up. In 2016 it was only $2.50–$3.00 per share, now they are around $180 – $200 per share, this is around 80x increase.

If you invested £1000 in Nvidia 10 years ago you would now have between £65k to £75k. Even if you invested £1000 5 years ago would now have around £11k.

Why did the stock go up so much?

It’s a mixture of things really, there timing was perfect but it could be argured that it was completely accidental. Nvidia is a company that makes GPUs (graphics card processors), these are normally made for gaming and sometimes other high processing computations used in science, but more crucially AI.

It just so happened that AI technology came about recently and AI requires lots of processing power, GPUs are perfect for this. They didnt have to move towards technology for AI because they already had it, so they were ahead before anyone else.

They also made some software called CUDA which allows other software to use NVIDIA GPUs for general-purpose computing.

Real money is no longer in gaming, its in datacenters for cloud computing, AI and big tech companies like Meta, OpenAI etc. All of these datacenters need GPUs. As demand for these GPUs went up Nvidia is able to charge more, for example there H100 / B100 GPUs sell for $20k–$40k+ each. You can read more about the H100 here.

The bottom line is that Nvidia is no longer a “gaming chip” company, but the company that powers AI.

Is Nvidia still a good stock to buy?

Although it’s impossible to say with 100% certaintly, it seems Nvidia is still going up, AI is only going to get more popular and useful. Unless a bigger player comes along it will continue to go up. In the long run I have no doubt it’ll be a good investment just like any of the other top 100 companies.

Although there are other companies that do what Nvidia does many are not at the same level. Intel, AMD, Google, Amazon, Apple, all create GPUs and infractructure in AI but Nvidia is still the top player.

Huawei, a Chinese company is a potential threat to them in the long run as they have backing from the Chinese government and it’s already replacing some of Nvidia in some datacenters in China. It’s worth looking into foreign companies in the long run as they can often produce cheaper alternatives, but many are still a long way behind.