Let's time-travel back a decade. On April 29, 2014, Disney's Captain America: The Winter Soldier was the U.S. monthly box-office champ, Tesla had just begun delivering its Model S cars to China, and Activision Blizzard (now owned by Microsoft) was two days away from revealing its videogame Call of Duty: Advanced Warfare.
The above paragraph was meant not only to take you back in time but also to give you an idea of the diversity of artificial intelligence (AI) chip leader Nvidia's (NASDAQ: NVDA) customers. All the companies mentioned use Nvidia's graphics processing units (GPUs) for various applications.
With the stage set, let's answer the question: How much money would your Nvidia stock investment be worth now had you invested $5,000 in the stock a decade ago?
From $5,000 to nearly $1 million in a decade
Had you invested $5,000 in Nvidia stock on April 29, 2014, your investment would be worth about $990,485, as of April 29, 2024. This amount assumes you reinvested the modest dividends Nvidia pays. For context, the S&P 500 index (widely considered the best proxy for the broad U.S. stock market) would have turned your 5 grand into $16,410 over the same period.
Now, let's dive into what drove Nvidia stock to its fantastic return over the last 10 years.
A snapshot of Nvidia's stock and business a decade ago
Nvidia was founded in 1993 and went public in 1999. So, a decade ago, it had been in business for 21 years and publicly traded for 15 years. On April 29, 2014, Nvidia stock closed at a split-adjusted price of $4.67 per share. Its closing price was $4.43 when adjusted for both stock splits (Nvidia has had five stock splits) and dividends.
Below is what Nvidia's business looked like in the quarter reported about a decade ago and in its most recently reported quarter.
| Metric/Topic |
Q4 Fiscal 2014 (Ended Late Jan. 2014) |
Q4 Fiscal 2024 (Ended Late Jan. 2024) | Growth |
|---|---|---|---|
| Revenue | $1.14 billion | $22.10 billion | 1,839% |
| Adjusted net income | $187 million | $12.84 billion | 6,766% |
| Adjusted earnings per share (EPS) | $0.08* | $5.16 | 6,350% |
| Business snapshot | Bulk of revenue came from gaming and professional visualization (pro viz) markets** | Revenue breakdown by platform: 83% data center, 13% gaming, 2% pro viz, 1% auto | N/A |
Data source: Nvidia. *Reported result was $0.32. This number is adjusted for the 4-for-1 stock split in 2021. **Nvidia didn't break out its revenue at this time in the same way it does now.
Nvidia's revenue has grown tremendously. Its 1,839% revenue growth over the decade equates to a compound annual growth rate (CAGR) of nearly 35%. Even better, its profits have soared at a much faster pace. Its 10-year adjusted earnings per share (EPS) growth of 6,350% equates to a nearly 52% CAGR.
Nvidia's AI-driven data center platform is driving its overall growth
Nvidia's data center platform has been the company's biggest growth driver over the last 10 years. It's more profitable than the company's overall business, which is why Nvidia's earnings have been rising significantly faster than its revenue over the last decade.
The data center platform's growth is being fueled by the rapid adoption of AI by companies and other entities. Nvidia is a huge beneficiary of this trend because it's the dominant supplier of AI chips for data centers. In the company's most recently reported quarter (fiscal Q4 2024), its total revenue surged 265% year over year, while its data center revenue skyrocketed 409%.
Nvidia's data center business had been growing at a fast clip for some time, but its growth exploded starting in calendar year 2023, thanks to generative AI. This new technology burst onto the scene in late 2022 when OpenAI released its ChatGPT chatbot. Demand for this tech is so robust because it expands the potential applications of AI.
AI is still in its relatively early innings. It's not too late to consider buying Nvidia stock.
