Nvidia (NASDAQ: NVDA) may be down 22% from its 52-week high, but shares of the semiconductor stock have doubled over the past year. The stock is up over 600% in the last three years and nearly 1,000% higher than where it was at the start of 2017.
In contrast, the S&P 500 is up a measly 109% in the past five years, meaning had someone invested $10,000 in Nvidia shares back then, they would be sitting on well over $100,000 today versus a $20,000 or so gain in the index.
Certainly, no one will pass up their portfolio doubling in value, but if we could have seen it rise tenfold in that time frame, it raises the question, did investors miss out by waiting to buy in today? Is it too late to buy Nvidia stock now? Let's find out!
Image source: Getty Images.
A pandemic fueled recovery
Without question, the chipmaker's stock kicked it into high gear beginning in 2020 with the advent of the pandemic and governments worldwide forcing people to remain in their homes. In large part, they turned to playing video games as a way to while away the hours.
Nvidia had been in recovery mode prior to that due to a rather disappointing fourth quarter in 2018. During that period, it lost about half its value due to the struggles of its gaming business and data center operations at the time, as well as the cryptocurrency market going bust. Today it's going gangbusters.
Graphics processing units (GPUs) for gaming generated 45% of third-quarter total revenue, hitting a record $3.2 billion, a 42% gain over the year-ago period. In addition, data center revenue surged 55% to also hit a record of $2.9 billion.
There also seems to be little worry about crypto these days as there are nearly 17,000 cryptos on the market, which is worth more than $2 trillion. Even though Bitcoin has lost nearly a third of its value in the past month, its price of $43,000 is still 16% above where it was a year ago.
What firing on all cylinders looks like
Nvidia is doing well now because virtually all of its segments are performing well. Best known for its gaming GPUs that make processing-intensive video games possible, the chipmaker has its finger in artificial intelligence (AI), data centers, and automobiles and is extending its reach into healthcare, networking, and arguably most exciting, the metaverse.
A virtual world where people can interact with one another or even conduct business, the metaverse became one of the most talked-about terms most people never heard of before Facebook changed its corporate name to Meta Platforms last year. And Nvidia is in the thick of it.
Image source: Getty Images.
Its Omniverse Avatar platform generates interactive avatars using AI, computer vision, natural language understanding, recommendation engines, and simulation technologies. It says its Omniverse Replicator is a synthetic-data-generation engine that produces physically simulated synthetic data for training deep neural networks.
Analysts at Citi declared Nvidia the "secular winner" in metaverse technology and picked the chipmaker as the top stock pick for 2022. Citi forecasts the growth of the metaverse alone could add $10 billion to its total addressable market in the coming years.
How high is up?
Wall Street forecasts Nvidia revenue will more than double over the next five years to near $60 billion and operating profits will more than triple. Even though it currently trades around $260 per share, analysts have a consensus price target of $330 on its stock, suggesting a 27% upside within the next year.
With the strong prospects for future profit, it's quite possible Nvidia could become a trillion-dollar stock within the next year. This is particularly likely if the company maintains the market cap growth of at least 100% that it has had over the past couple of years. As the company currently holds a market cap of nearly $650 billion even a growth of a mere 50% over the next year would bring it within reach of a trillion dollars. While an investor might have missed out on a 1,000% gain over the last five years, with so many tailwinds behind it they can still ride this rocket on its way to possibly becoming a multitrillion-dollar stock.
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin, Meta Platforms, Inc., and Nvidia. The Motley Fool has a disclosure policy.
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