A lot is made of the rise of the big tech stocks. There are always plenty of “If you bought $1,000 of [fill in the blank] 10 years ago…” out there these days. But Nvidia (NASDAQ:NVDA) stock usually isn’t one of those.
That’s good for us.
Perhaps zero-to-hero stuff is the grease that keeps the wheels of FOMO investing going. Or maybe it’s the accelerant that get new investors excited about rolling the dice in the market.
Nvidia is up more than 225% in the past three years. And since its IPO in 1999, NVDA stock is up nearly 51,000%.
What those stats don’t reveal is how Nvidia just kept doing what it was good at and ended up one of the premier chipmaking stocks of the 21st century.
NVDA Stock: King of the GPU
Before our current era of mobility, way back before Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) was a thing and Apple (NASDAQ:AAPL) was trading around $40 a share, before its second of five stock splits.
NVDA stock had its IPO in January 1999, and the first of its five stock splits was in June 2000. Both stock split the same month and year, in the beginning of the dot-com bust. But they have certainly more than endured since then.
While AAPL was focused on the consumer, NVDA was focused on the chips inside the box.
Its initial audience research and development divisions in companies, governments and educational institutions. These were the people that were willing to spend big money to buy top-quality graphics processing units (GPUs). There was also a budding gaming community that was stepping up their interest in better performance.
And that was what kept NVDA stock moving was the rise of computers – desktops and laptops at the time – and the growing versatility of computers and programs.
Rise of the Internet
The next big growth boost for NVDA stock was the rise of the internet after the dot-com bust. Much of the optimism that fueled the runup to the bust was tangible, but the technology wasn’t there to realize all the potential at the time.
But after those crazy days the real companies with real businesses that were left set about making all those hopes realities. Fiberoptic cable and the surrounding technologies meant much faster internet speeds. It also started telecoms down the mobility road.
This took computing out of the workplace and home and into the streets. And devices continued to get smaller and more powerful simultaneously.
NVDA stock was still making GPUs, but it now had more and more markets where it could participate.
Today and Tomorrow
It was less than a decade ago when NVDA stock really started to come into its own. By now mobility wasn’t just limited to mobile phones, it was about cloud computing, faster, more powerful telecom networks and massive data farms and big data.
All these new opportunities were demanding better quality, more powerful GPUs because data visualization becomes crucial when the quantity of your data is enormous. Because to manage it, you have to see it.
Also, virtual reality and augmented reality became possible with all this computing power. Yet they needed high-end GPUs to power them.
As smart devices began to show up, they needed fast, reliable GPUs as well. Autonomous vehicles, smart cars, artificial intelligence, robots, machine learning, you name it and Nvidia GPUs are there.
And the crazy thing was, no one really challenged NVDA stock in the higher-end markets until recently. But even now, it ends up partnering with big players like Advanced Micro Devices (NASDAQ:AMD) rather than competing against them.
AMD and Intel (NASDAQ:INTC) can keep their GPUs but few try to knock off NVDA stock’s high-end chips. As a matter of fact, NVDA is now going after the legacy chipmakers rather than the other way around.
A True Growth Stock
NVDA stock is one of the best choices for anyone bullish on an increasingly tech-driven world. It’s so deeply embedded in the core of the tech sector that it will continue to grow for years to come.
Right now, we’re in the middle of a big chip shortage. And that’s great for NVDA stock. It’s up 73% year to date and 72% in the past 52 weeks. This bull run has plenty of legs left.
Your best bet is to buy in over time. Take an initial position and then get in a bit at a time.
On the date of publication, GS Early did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
GS Early has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors and publishers during that time. He’s seen a few things and heard plenty.
