When it comes to market-crushing performance, there's no question that Nvidia (NVDA -0.05%) qualifies on all accounts. The maker of graphics processing units (GPUs) has gained 145% so far this year, and that isn't an anomaly. Over the most recent five- and 10-year periods, the stock has surged 1,270% and 8,630%, respectively.
Its performance has been so spectacular, in fact, that some are beginning to wonder how Nvidia could possibly continue its relentless rally. For investors who fear this locomotive has already left the station, here's some good news: This could be just the beginning of the company's epic run.
A quarter on fire
Given the already high expectations built into Nvidia's stock price, there was little room for error when the company reported third-quarter results last week -- but the chipmaker cleared the bar with ease. Nvidia delivered record revenues of $7.1 billion, up 50% year over year. Driving sales to new heights were record-setting performances by both of the company's largest segments: Gaming revenue of $3.22 billion climbed 42% year over year, while the data center segment generated sales of $2.94 billion, up 55%.
Nvidia's leverage was on full display as its earnings per share (EPS) of $0.97 surged 83% year over year, while also increasing 3% sequentially.
Yet, even in light of these results, significant future opportunities remain.
The metaverse is coming
One topic that has the tech world buzzing this year is the metaverse, a virtual world that will be fueled by recent advances in technology -- including augmented reality (AR), virtual reality (VR), video, and speedier processors -- which will immerse users in a digital world where they can work, play, and interact with other participants.
Nvidia will play a central role in the coming metaverse, as each of the aforementioned technologies requires semiconductors with lightning-fast responses. That's where Nvidia's industry-leading GPUs come in.
Parallel processing, or the ability to run a host of complex mathematical calculations simultaneously, is necessary to power these next-generation technologies. GPUs will render lifelike images in the metaverse in much the same way it works in video games, which is Nvidia's bread and butter. GPUs are also central to underpinning artificial intelligence (AI), providing the lightning-fast speeds necessary to run these complex algorithms.
Nvidia recently held its annual developer day and made it clear during the GPU Technology Conference (GTC) early this month that it was leaning into the coming metaverse -- though Nvidia refers to the futuristic digital realm as the "omniverse." Harnessing the company's already sizable expertise in creating AI systems, Nvidia released a number of hardware and software tools designed to render these new virtual spaces, melding computer vision, AR, VR, and other groundbreaking technologies to help bring the metaverse to life.
In a recent interview, CEO Jensen Huang laid out a vision where the omniverse won't just provide a realm for recreation and commerce, but also a place for businesses to run simulations that will ultimately result in real-world cost savings. "By doing that, we could decrease the amount of waste, and that's the reason why the economics are so good for companies," Huang said.
The future is now
While the metaverse might sound like something out of a futuristic science-fiction novel, many of the foundational elements are already in place, thanks to recent technological advances. This represents a massive opportunity as the metaverse moves from the drawing board to reality.
Morgan Stanley analyst Brian Nowak has been crunching numbers and estimates the metaverse represents an $8 trillion addressable market.
Investors will want to stake their claim in this once-in-a-generation opportunity. Nvidia's GPUs will underpin much of the technology that will ultimately bring this digital realm into being, so it's uniquely positioned to win. The timing for the full development of the metaverse is still very much up in the air, but fortunately for Nvidia shareholders, the company's existing business lines will do much of the heavy lifting until the metaverse evolves.