If you had invested $10,000 in Nvidia (NASDAQ: NVDA) 10 years ago, your shares would be worth a mind-blowing $503,000 today. This staggering gain is the sort of investment that changes lives.
So, are there still opportunities like this in today's market? Surely. The only question is: Which stock is the next Nvidia? I think the answer might be cloud data analytics company Snowflake (NYSE: SNOW).
Image source: Getty Images.
Revenue growth fuels stock price gains
For a stock to generate anywhere near a 5,000% return, it needs growth -- and lots of it. Consider Nvidia. It grew its quarterly revenue at an average rate of 26% for 10 consecutive years.
NVDA Revenue (Quarterly YoY Growth) data by YCharts.
Snowflake's recent quarterly revenue growth is actually much higher than Nvidia's long-term average. The challenge for Snowflake will be maintaining its spectacular revenue growth for years.
The cloud computing market is enormous; Snowflake will need to capture a significant portion of that market if it wants to match Nvidia's impressive 10-year revenue growth average.
What about its market cap?
Powerful revenue growth can drive a company's stock price higher. Still, there is another question to consider: Can Snowflake match Nvidia's incredible 5,000% return over 10 years? Snowflake's market cap is $48 billion; it's not a small-cap stock.
NVDA Market Cap data by YCharts.
A 5,000% increase in Snowflake's market cap would make it a $2.5 trillion company. Today, only one company has a market cap above $2.5 trillion: Apple.
However, that doesn't mean Snowflake couldn't be that large 10 years from now. Remember, 10 years ago, Nvidia's market cap was $8.7 billion -- nowhere near its current market cap of $424 billion. Back in 2012, there was only one American company with a market cap above $500 billion: Apple.
In short, it would be preposterous to suggest that Snowflake could reach a market cap of $2.5 trillion next year. But it's not inconceivable that it could reach that level a decade from now. Nvidia has shown it's possible.
Is Snowflake a buy now?
Whether Snowflake will bag a return of 5,000% or more, the real question is if the stock is worth buying now. I think it is. Snowflake operates on the cutting edge of cloud data analytics. As organizations continue to produce ever-more data, Snowflake's services will become even more popular as they allow institutions to sort, sift, and draw conclusions using all of their data. And that should result in a big win for Snowflake investors over the next decade -- maybe even matching Nvidia's success.
10 stocks we like better than Nvidia
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Nvidia wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 17, 2022
Jake Lerch has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Nvidia, and Snowflake Inc. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
