Nvidia (NVDA (opens in new tab)) stock has been a rare winner amid the market’s recent swoon, but then long-time shareholders should be used to that sort of thing by now.
That’s because despite its high volatility – and some rather vertiginous ups and downs along the way – this semiconductor stock has vastly outperformed the broader market since going public at the end of the last century.
But before we take a look at Nvidia stock’s illustrious past, let’s recap how it’s been doing recently.
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After losing half its value last year – and attracting some bargain-hunting billionaire investors around its share-price nadir – NVDA stock was up 62% through the first eight weeks of 2023. That led the S&P 500 by a whopping 57 percentage points.
A chunk of those returns came on Feb. 23 alone, when shares rallied 14% following Nvidia’s quarterly earnings report (opens in new tab). The market was especially happy to see robust growth in the firm’s data center business. For that week as a whole, NVDA stock gained 8.9%. Meanwhile, the S&P 500 suffered its worst weekly performance since early December of last year.
Nvidia stock’s market-beating ways go much farther back than that, however. In fact, few stocks have done more for investors over the past few decades than Nvidia. From its initial public offering at $12 a share in January 1999 through December 2020, NVDA stock created $309.4 billion in shareholder wealth, according to an analysis by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business (opens in new tab) at Arizona State University.
Indeed, per Bessembinder’s findings, which account for a stock’s increase in market value adjusted for cash flows in and out of the business and other adjustments, Nvidia is one of the 30 best stocks of the past 30 years.
Looked at another way, over just 24 years as a publicly traded company, Nvidia stock generated an annualized total return of 26.9%. The S&P 500, with dividends reinvested, returned an annualized 9.8% over the same period.
Have a look at the chart below comparing Nvidia stock’s all-time performance vs. the performance of the broader market.
(Image credit: YCharts)
As you can see in the chart, most of the shareholder wealth generated by Nvidia came over just the past four years. That’s because back in the day, the primary market for Nvidia’s graphics processing units (GPUs) consisted of PC and console video game enthusiasts.
Happily for Nvidia, it just so happens that the company’s powerful GPUs and related intellectual property are indispensable to the fields of artificial intelligence (AI), professional visualization, cryptocurrency mining and more. As noted above, NVDA processors are increasingly in demand for use in data centers.
Few blue chip stocks offer so much exposure to so many emerging endeavors, which helps explain NVDA stock’s meteoric rise.
But as remarkable as the above chart may be, it doesn’t quite get to the heart of what NVDA stock has meant to long-term shareholders and their brokerage statements. For that, consider the following facts about Nvidia stock:
The Bottom Line on Nvidia Stock?Over the past two decades, Nvidia stock generated a total return of more than 24,000%, or 31.6% annualized.
Therefore, if you invested $1,000 in Nvidia stock 20 years ago, today it would be worth more than $241,000.