NVDA

This 1 Chart Shows How Nvidia Became the Most Explosive "Magnificent Seven" Stock

Nvidia (NASDAQ: NVDA) has been on an incredible run over the last year. The artificial intelligence (AI) leader's share price has soared roughly 240% over the last 12 months, making it the best-performing "Magnificent Seven" stock across the stretch. The explosive performance has pushed the company's market cap to roughly $1.96 trillion, and it now ranks as the world's fourth-most valuable company.

AI has accelerated Nvidia's incredible transformation

Nvidia was founded in 1993 and got its start as a designer of graphics-processing-units (GPUs) used for video games and other visually intensive applications. The company's first GPUs released in 1999 and immediately delivered major leaps forward in graphical capabilities, but the rise of advanced processors in data centers has been the true driver of the AI frontrunner's incredible growth.

At the beginning of the last decade, Nvidia began focusing more on designing GPUs for data centers. It was a move that would go on to dramatically reshape the company's business and lead to major leaps forward in cloud and technologies. For more context, check out the chart below, which tracks the progression of the processing leader's business groupings and revenue by segment.

A chart showing Nvidia's annual revenue by segment.

Source: Statista.

The advanced processing capabilities of the company's GPUs makes them well suited for cloud technologies. In the company's 2023 fiscal year, which closed at the end of calendar 2022, its compute and networking segment accounted for the majority of revenue for the first time. Growth for the segment exploded from there onward.

With most large-scale AI applications currently being run through the cloud, Nvidia's most advanced processors have become the foundational hardware that is underpinning the AI revolution.

Nvidia currently controls roughly 90% of the market for the kinds of advanced GPUs used for AI and accelerated computing applications. Now that demand for these technologies is skyrocketing, the semiconductor specialist's sales, earnings, and share price have been surging in tandem.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of February 26, 2024

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. 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.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.