Nvidia (NVDA +2.21%) is a semiconductor company that has been in the news a lot lately, in part because of the 10-for-1 stock split it executed in mid-June. That was certainly exciting for shareholders, as it turned a 50-share holding into 500 shares and a 100-share position into a 1,000-share one. (Of course, the stock price was immediately adjusted down proportionately, leaving everyone's total holding value largely unchanged. Stock splits are mostly nothing burgers.)
There are far more interesting and/or amazing things to know about Nvidia, though. Here's a review of seven of them.
Image source: Getty Images.
1. Nvidia is huge!
It was only in 2018 when Apple was being hailed as the first American trillion-dollar company. Well, here we are, with Nvidia valued at more than $3 trillion at the time of this writing. Indeed, as of mid-March, Nvidia had added $1 trillion to its market value in just the previous 50 days. Oh, and by the way -- the company was only founded in 1993.
NASDAQ: NVDA
Key Data Points
2. Nvidia's stock has been a phenomenal performer
As you might suspect, if you didn't already know, Nvidia's stock has grown at an incredible pace in recent years. Consider that the overall stock market has averaged annual gains close to 10% over many decades. Nvidia has had a shorter run, of course, but its average annual gain over the last 15 years was a whopping 50%, as of this writing. Over the past 10 years, it has averaged 75%, and over the past five years, the stock has averaged 104%, roughly doubling annually. (In the past year, the stock has more than tripled.)
Those numbers might have you rushing to visit your brokerage to order shares of Nvidia, but never do so based solely on past returns. They don't necessarily dictate future returns, after all, and the bigger a company gets, the harder it can often be to grow rapidly. Plus, some phenomenal growth stocks can end up overvalued for a while.
3. Nvidia has pivoted its business effectively
Nvidia made a name for itself as a titan in the gaming-chip business -- introducing the world's first graphics processing unit (GPU), GeForce, in 1999 and launching an industry. But things have changed recently. Whereas Nvidia used to get most of its revenue from gaming chips, it got fully 80% of its revenue from its data-center-related technology, as of its third quarter. That's quite a pivot.
The reason behind the pivot is that Nvidia's data center platform is heavily used for artificial intelligence (AI) endeavors, which need a lot of computing power. Nvidia is investing in AI companies on its own, as well.
Looking at Nvidia's business performance shows that its stock surge isn't whimsy -- it's based on stunning revenue growth:
|
Year |
Total revenue, in billions |
|---|---|
|
Trailing 12 months |
$79.8 |
|
2024 |
$60.9 |
|
2023 |
$27.0 |
|
2022 |
$27.9 |
|
2021 |
$16.7 |
|
2020 |
$10.9 |
|
2019 |
$11.7 |
|
2018 |
$9.7 |
|
2017 |
$6.9 |
|
2016 |
$5.0 |
Data source: Morningstar.com, as of mid-June, 2024.
4. Nvidia's co-founder and CEO Jensen Huang is impressive, too
It should be clear that Nvidia's leader Jensen Huang is a standout, as any leader would have to be to oversee such a success story. But there's much more to the Taiwan-born American.
For one thing, he's now on lists of the richest people in the world, but as a youth, he attended the Oneida Baptist Institute in Kentucky, which was a religious reform school -- by accident. (His uncle had mistaken the school for a prestigious boarding school.) There's now a Huang girls' dormitory and classroom building at the school.
Huang understands hard work, having had to clean bathrooms at his boarding school and later working at a Denny's in California, where he and his friends came up with the idea of Nvidia.
5. Nvidia is a fairly flat organization
In many major companies, it's common for a CEO to have fairly few direct reports. At Nvidia, Huang had 50 direct reports as of late 2023, explaining that "The more direct reports the CEO has, the less layers are in the company... It allows us to keep information fluid, allows us to make sure that everyone is empowered by information."
6. Nvidia nearly went bankrupt in its early years
Few great companies never encounter serious challenges and setbacks, and Nvidia is no exception. The company nearly went bankrupt in its first few years. As Huang has explained: "I think when you build a company from the ground up, and you've experienced real adversity, and you really experienced nearly going out of business several times, that feeling stays with you..." adding, "I don't wake up proud and confident. I wake up worried and concerned."
Huang has also said: "I think during adversity you're more focused. And when you're more focused, you could perform better."
7. Nvidia, after its great run, may still be worth buying
After Nvidia's colossal gains, it's certainly not the bargain it once was, and those who bought earlier will enjoy bigger total gains than those who buy today. Plenty of people actually think the stock is not the best bet right now, for various reasons -- including a valuation that some see as less compelling than those of some other stocks.
But if you plan to be a long-term holder of Nvidia shares, buying at recent levels can end up rewarding you -- even if the stock pulls back for a while.
Whether you buy now, add the company to your watchlist, or just pass, you can't deny that Nvidia is an amazing company -- for many reasons. If you're on the fence about buying, consider doing so in installments.
