What's the significance of 1999? It's the year that shares of Nvidia (NVDA 3.32%) traded publicly for the first time.
The company started out with a vision to deliver 3D computing graphics in 1993, and today, 30 years later, it stands ready to revolutionize the business world through artificial intelligence (AI).
The company's stock has soared since its debut, and despite a 31% decline from its all-time high, investors who bought in early are still sitting on monumental gains.
Here's exactly how much their patience has been rewarded.
Nvidia has truly changed the world
Nvidia was founded in 1993 by a trio that includes Jensen Huang, the company's president and CEO from the start. With the onset of personal computing, the team set out to deliver 3D graphics to the gaming and multimedia world, and it delivered its first graphics chip in 1995.
By 1999, the company had produced the world's first GPU (graphics processing unit). It was 50% more powerful than its prior chip, and it could run some of the best PC games at the time.
More importantly, it was the first-ever product released under the GeForce banner, a brand that has become the most recognized name in graphics hardware.
Nvidia has never stopped innovating since, and it now produces some of the most sought-after graphics chips for gaming, and especially data centers that serve as training grounds for AI. The company is regarded as a pioneer of AI technology, and its chips are responsible for training platforms like ChatGPT, which have recently taken the tech world by storm.
Nvidia has built some of the world's most powerful AI supercomputers and software applications. Last month, Huang announced the company would deliver some of those applications -- and access to its DGX supercomputer -- in the cloud, through partnerships with Microsoft Azure and Alphabet's Google Cloud.
Those deals will put AI within reach of millions of businesses around the world, placing Nvidia at the epicenter of yet another technological revolution.
Nvidia has become a financial powerhouse
The semiconductor industry is cyclical, which means its revenue ebbs and flows alongside the business cycle. When times are good, organizations spend more on upgrading their systems, and when times are bad, they make do with what they have.
The chart below shows Nvidia's annual revenue since its initial public offering (IPO) in 1999. You'll notice it's quite lumpy year to year, which reflects its cyclical nature. But the trajectory is absolutely clear: The company generated $158 million in revenue in fiscal 1999, and it has since soared to $26.9 billion in fiscal 2023 (ended Jan. 29).
Gaming and the data center make up the overwhelming majority of Nvidia's revenue today. But its automotive segment is one to watch, because while it generated only $294 million in sales in the fourth quarter of fiscal 2023, that was a 135% jump year over year.
Nvidia's Drive platform is an end-to-end (hardware and software) solution for car manufacturers that want self-driving technology. So far, the company has lined up a sales pipeline worth at least $11 billion between now and 2028. But industries like autonomous ride-hailing could be a $14 trillion opportunity by then, according to an estimate by Cathie Wood's Ark Invest.
Therefore, the company is still in the very early innings of that opportunity.
Here's how much a $1,000 investment in Nvidia's IPO is worth today
Nvidia completed its IPO on Jan. 22, 1999, at $12 per share. The company's stock has since grown so significantly that management conducted five stock splits to ensure the price remained low enough that shares were accessible to small investors.
Had you invested $1,000 at its IPO, you would have acquired 83 shares at $12 per share. Adjusting for the stock splits, you would actually have 3,984 shares today, with a cost basis of $0.25 per share.
Given that Nvidia trades at $235.01 per share as of this writing, that translates to a return of 94,000%. In dollar terms, that initial $1,000 outlay in 1999 would be worth a whopping $940,000 today.
But there's more; Nvidia has paid a small dividend since fiscal 2012, so assuming you never sold a single share along the way, you would have also collected a total of $5,325.01 in dividends.
Investors who don't own Nvidia stock yet might be wondering if it's still a buy. According to an estimate by Ark Invest, technologies like AI could add $200 trillion to the global economy by 2030. Since Nvidia is a leader in the field, it stands to reap significant rewards if that prediction comes to fruition.
Nvidia stock is down 31% from its all-time high right now, so this could be a great opportunity to buy in for the long term.
