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NVIDIA Stock in 6 Charts

NVDA Total Return Price Chart

Graphics and mobile computing specialist NVIDIA Corporation 's(NASDAQ: NVDA) stock has been red-hot in 2016. The stock's scorching 225% total return in 2016 made it the best-performing stock in the S&P 500 for the year.

You might be wondering if it's too late to invest in NVIDIA. These six charts should help you make investing decisions by giving you a broad overview of NVIDIA's business and its stock.

NVDA Total Return Price Chart

Data source: YCharts .

The following chart gives you a 10-year view of these same stocks. While past performance isn't necessarily indicative of future performance, past long -term performance often gives investors insight into a company's sustainable competitive advantage. Moreover, chipmakers in general tend to be cyclical -- a factor that can be seen in a longer term chart.

Data source: YCharts .

While NVIDIA's 10-year performance is very strong, it delivered the majority of its gains in 2016. NVIDIA was underperforming the S&P 500 (purple line) until 2016. This isn't necessarily a sign of a bad stock, but this past underperformance and overall volatility is something potential investors should be aware of.

NVIDIA'S business and growth dynamics

NVIDIA, which was founded in 1993 and went public in 1999, is a visual computing company that operates in two main segments, graphic processing units (GPU) and Tegra processors, both of which have been growing nicely.

The GPU business' main products include the GeForce line for gaming, Quadro for design professionals, and Tesla for artificial intelligence (AI) and other applications. The Tegra segment provides processors that integrate a computer onto a single chip; end markets include a variety of things that are mobile -- mobile devices to cars to drones.

NVIDIA is the dominant player in its flagship business of selling discrete GPUs for computer gaming, with this core business continuing to grow robustly. In Q3 of fiscal 2017, ended on Oct. 30, gaming revenue soared 63% year over year to $1.2 billion, accounting for 62% of the NVIDIA's total revenue. Professional visualization revenue increased 9% to $207 million, data center revenue jumped 193% to $240 million, and automotive revenue rose 61% to $127 million. For the quarter in general, revenue shot up 54% to $2.0 billion, net income soared 120% to $542 million, and earnings per share jumped 89% to $0.83.

Here's how the four core platforms, or end markets, have performed through the first nine months of fiscal 2017.

NVDA PE Ratio (TTM) Chart

Data by YCharts .

NVIDIA's relative (to growth) valuations are more palatable

Common valuation metrics -- such as the price-to-earnings (PE) -- look at valuations in a vacuum. Metrics that take growth into account can be more helpful. The PEG (P/E to trailing or future projected growth) is one such metric. As a rough rule of thumb -- there are many factors that come into play -- a PEG of 1.0 implies that a stock is fairly valued. So NVIDIA's stock doesn't seem overvalued if we factor in earnings.

Data by YCharts .

The million-dollar question, of course, is whether NVIDIA can continue to churn out strong earnings growth. Wall Street projects the company will grow EPS at an average annual rate of 28.6% over the next five years. However, given that NVIDIA routinely beats analysts' estimates -- it crushed them by 46% in Q3 -- there's reason to believe long-term growth expectations will prove too conservative.

Even if Citron is right and the stock falls to about $90 per share, if NVIDIA's promise comes to fruition, the difference in five or ten years between the stock's current share price of about $106 and $90 will be insignificant.

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Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nvidia, Qualcomm, and Tesla Motors. The Motley Fool recommends Intel. 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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