Nvidia (NVDA +2.19%) probably has helped many investors along their path to wealth in recent times. The top technology company, which jumped into the forefront thanks to its artificial intelligence (AI) chips, has seen its shares climb nearly 400% in just under 14 months. So, if you'd invested $50,000 in Nvidia at the start of that time period, today your investment would be worth about $250,000.
Investors have piled into Nvidia because the company's chips dominate the AI market, holding a share of more than 80%. And considering the AI story is just getting started, a lot more growth may be ahead. Does this mean Nvidia could help you become a millionaire, even after its phenomenal gains so far? Let's find out.
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A first success in the world of gaming
First, it's important to note that Nvidia has been around for quite some time and initially built its reputation in the worlds of gaming and graphics. The company's graphics processing units (GPUs), which process many tasks simultaneously, were ideal for the vivid images and speed needed in these sorts applications.
But GPUs turned out to be gamechangers for other industries too -- and the key to powering AI. Nvidia's GPUs are the fastest on the market, and customers are relying on them for "deep learning" -- the pouring of massive quantity of data into AI models so that they eventually can perform complex tasks and solve problems.
Nvidia offers not only chips but entire platforms that bring the power of AI to a company's or a developer's fingertips. Some are even specifically designed to suit particular industries, such as the BioNeMo generative AI drug discovery platform for pharma and biotech companies. And Nvidia has partnered with the biggest cloud companies like Amazon's Amazon Web Services (AWS) and Microsoft Azure to make its solutions available on their platforms.
All of this has resulted in soaring earnings at Nvidia in recent times. For example, in the third quarter of the fiscal year, the company reported a triple-digit increase in revenue to reach a record of more than $18 billion -- and net income surged about 1,000% to more than $9 billion. Data center revenue, which includes Nvidia's AI products and services, contributed the most, reaching a record of more than $14 billion.
So, it's no surprise that Nvidia's shares skyrocketed, reflecting this top performance. But now the question is whether the company can continue at this pace -- or if rivals or other elements could slow it down. It's certain that Nvidia faces some challenges. For example, the U.S. ban on the sales of certain chips to China should hurt since China and other countries affected by the ban have made up 20% to 25% of data center sales in recent quarters. Nvidia told investors during the latest earnings call to expect an impact in the fourth quarter, though growth in other regions may compensate.
NASDAQ: NVDA
Key Data Points
The fastest chip
Rivals, from Advanced Micro Devices to Nvidia's own partners like AWS, have developed AI chips. But Nvidia's remain the fastest, and the company continues to pour investment into research and development -- that should help it stay ahead.
All of this means we might see some slowdowns in the pace of growth at certain points, but overall, I wouldn't expect that to become a trend. Instead, I think Nvidia's leading position, vast number of AI products and services, and investment in R&D will drive revenue growth in the coming years -- and the share price should follow.
Now, let's get back to our question: Is Nvidia a millionaire-maker? It's not likely that one stock on its own will make you a millionaire unless you invest a massive sum in that player -- and the stock skyrockets. That's a huge risk to take, and I wouldn't advise it even if a stock looks promising. You're much more likely to reach millionaire status by investing in a selection of quality stocks -- building up to 20 or more over time if you can -- and holding on for the long term.
If you do this and include Nvidia in the mix, then you may reach millionaire status over time, and even if you don't, you're likely to significantly build your wealth. And that means you probably won't regret investing in AI giant Nvidia even after its fantastic winning streak.
