Many shareholders profess to be long-term buy-and-hold investors, but excess volatility, economic instability, and even lofty valuations can test the mettle of even the most experienced investors.
Such has been the case with Nvidia (NVDA 1.48%) during the past half-decade. Back in early 2021, roughly half its revenue came from its gaming segment. The stock kicked off 2021 by falling 24% amid fears of a graphics processing unit (GPU) shortage, prompting some investors to head for the exits.
Image source: Nvidia.
The reality turned out to be much different, as Nvidia reported record quarterly revenue of $5 billion for its fiscal 2021 fourth quarter (ended Jan. 31, 2021). The stock defied detractors that year, gaining 125% in 2021.
The celebration would be short-lived. A period of rampant inflation and slowing economic growth between November 2021 and October 2022 sent Nvidia into a tailspin, and the stock price plunged 66%.
Fast forward to today, and Nvidia is a very different company. The data center segment, driven by demand for artificial intelligence (AI), accounts for the lion's share of the company's accelerating revenue growth. In the third quarter alone, the data center segment delivered record revenue of more than $51 billion -- more than 10 times Nvidia's total revenue five years ago.
NASDAQ: NVDA
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Furthermore, management's forecast calls for fourth-quarter revenue of $65 billion, or growth of 65%, so Nvidia's growth story is still very much intact.
Nvidia investors have learned firsthand the value of holding through the volatility. In fact, if you'd invested just $100 in Nvidia stock five years ago, you'd have $1,479 today (as of this writing). That's a 1,380% gain. To be fair, there's no way investors could have predicted the blistering demand for AI that continues to fuel its rise. That said, holding through uncertainty can yield big winners.
