NVIDIA (stock ticker: NVDA) is the California-based multinational company whose 1999 invention of the graphics processing unit, or GPU, helped to accelerate growth in the personal computer gaming market, redefined modern computer graphics, and ignited the launch of artificial intelligence (AI).
The business has enjoyed meteoric success in recent years and, on 18 June 2024, leap-frogged both Microsoft and Apple to briefly become the world’s most valuable company. Although, past performance is not indicative of future results
A subsequent sell-off in the company’s shares means NVIDIA is, at the time of writing, now ranked third on the world list.
NVIDIA is one of the ‘Magnificent Seven’ group of influential US mega stocks (along with Apple, Microsoft, Alphabet, Amazon, Tesla and Meta Platforms).
No matter how thorough the analysis, stock prices cannot be accurately predicted. Anyone who invests in stocks must understand their capital is at risk
The company is split into two parts, Graphics and Compute & Networking. The Graphics element includes GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms.
The Compute & Networking division spans Data Center platforms and systems for AI, high-performance computing, and accelerated computing; Mellanox network and interconnect solutions; automotive AI Cockpit, autonomous driving development agreements, and autonomous vehicle solutions.
At time of writing, $1 = £0.78
Be mindful, past performance is not an indicative of future results.
NVIDIA’s share price has soared over the past year. The company’s NVIDIA’s most recent quarterly update for the financial year 2025 bowled over market commentators when it reported revenues of $26 billion, up 262% year-on-year.
The same update also revealed that net income stood at $14.9 billion for the same period, up 628% y-o-y as a seemingly insatiable desire for AI continues to grip businesses and consumers alike.
On 7 June 2024, the company carried out a ‘10 for 1 share split’. This left the company’s overall valuation unaltered, but the move meant that, from Monday 10 June 2024 (when the split came into force), one existing NVIDIA share was converted into 10 new shares worth a tenth of their former price.
Post-move, the share price reached a record $140.76 on 20 June.
Charlie Huggins, manager of the Wealth Club Quality Shares Portfolio, says: “The NVIDIA stock split doesn’t change the fundamentals, or value, of the business. But it could make the shares even more attractive to retail investors.
“The pre-split share price of more than $1,000 dollars locked out investors looking to invest smaller sums. Post-split, the shares will be changing hands for one tenth of the price, making it easier for retail investors to invest smaller sums in NVIDIA’s shares and potentially fuelling further speculation.”
Dan Coatsworth, investment analyst at AJ Bell, says: “Playing around with the share price by making technical adjustments is a psychological trick. It’s a classic technique that has been adopted by Apple and Tesla, among others, many times over the years.
“After all, not everyone can afford to spend, say, $1,200 on a single share, and many people would baulk at the idea of a stock costing that much. At a tenth the price, it’s a different conversation.”
It’s impossible to predict with certainty how a company’s share price will perform. A stock’s behaviour depends partly on the business’s internal performance, combined with wider macro-economic events affecting the markets in which it operates.
Thanks to the boom in AI, NVIDIA is enjoying a purple patch. According to Victoria Scholar, head of investment at interactive investor, an online share trading service, the “AI stock market darling” was the most bought stock among the platform’s UK investors for the second month running in May 2024.
Against this backdrop, we’ve asked stock market commentators what investors could potentially expect from NVIDIA’s performance for the remainder of this year and beyond.
Kyle Rodda, senior market analyst at Capital.com, says: “NVIDIA is at the centre of the AI boom. It has the chips that everybody needs and is in the dominant market position to take advantage of the wave of investment into AI technology.
“The company has built a reputation for delivering results and beating expectations. NVIDIA has consistently grown its revenues even beyond the extraordinarily lofty expectations that analysts have setIndore Investment. It’s one of the reasons why the stock has surged to levels that put the company close to being the most valuable on the planet.
“Despite this consistent excellence since the beginning of the AI revolution, the company still has its critics. More specifically, some are sceptical about NVIDIA’s market valueAgra Investment. The company’s shares trade at eye-watering valuations, which will require almost unprecedented revenue growth to justify.
“It’s one of the reasons that seasoned investors draw a parallel to the experience of Cisco and its share price crash as part of the ‘dot.com bubble’ from 25 years ago.Simla Investment
“Ultimately, though, NVIDIA is still delivering the goods. While analysts expect lower rates of sales and earnings growth from here, forecasters predict that the company will continue to double its top and bottom lines, at least for the next few quarters.”
Saverio Berlinzani, senior analyst at ActivTrades, says: “The AI sector is at the beginning of a phase which will likely see much broader growth and development. On the back of this, the recent figures posted by Nvidia came in well above market expectations.
“At the start of 2024, large-scale investors including hedge funds and investment funds signalled a change in their strategies and significantly increased their exposure to sectors expected to gain from and thrive on the advances in AI and its rapid development.
“This is one of the main reasons behind Nvidia’s stratospheric performance since the beginning of the year, which has seen its share price rise by an astonishing 140%.
“The story has not stopped there, either. Thanks to the current euphoria surrounding both the microprocessor sector and AI in general, major stock indices featuring a heavy technology component, such as the Nasdaq and S&P 500, do not seem to want to correct downwards. We expect growth margins at the company to remain significant in the medium and long-term.”
Wealth Club’s Charlie Huggins says: “Since the launch of ChatGPT, a raft of companies across almost every industry have rushed to integrate Generative AI. The speed with which this technology has been embraced has taken virtually everyone by surprise. But not NVIDIA.
“The company was very early to recognise the transformative potential of AI and has invested heavily in this area for many years. As such, it has become the undisputed leader in producing chips that can perform complex AI tasks.
“NVIDIA has become a ‘picks and shovels’ provider in the emerging field of AIAhmedabad Investment. It doesn’t matter which AI solutions succeed and which fail. As long as companies pour more money into developing AI solutions, the company stands to benefit handsomely. That’s a great position to be in.
“That said, investors should be aware that NVIDIA’s business has been subject to boom-and-bust cycles in the past and it operates in very fast-changing markets. Longer-term, there are also question marks over just how embedded AI becomes in our everyday lives and whether Nvidia can maintain its lead as competitors scramble to catch up.
“But right now, there is seemingly no one that can come close.”
Julian Wheeler, US equity analyst at Shard Capital, says: “The ‘bull’ case is based on a belief that the AI opportunity is even greater for NVIDIA than the internet was for, say, Cisco back in the dot.com boom. In addition, whilst Cisco was sharing the wealth with several other tech giants, Nvidia is currently harvesting almost all the gains itself.
“Whilst these circumstances continue, all is good. If NVIDIA can continue surprising the market every quarter and confirm its status as the only ‘picks and shovels’ stock you need for the AI goldrush, you could even target a ‘Tesla level’ of overvaluation.
“I do not anticipate this scenario for three reasons. Firstly, valuations must be related to interest rates and we are at a base rate of around 5% now in contrast to less than 1% at the peak of Tesla’s rise. Secondly, AI’s promise has yet to be realised. The success, or otherwise, of Microsoft’s CoPilot might be the first evidence, but NVIDIA’s sales to date have already priced in a very favourable outcome. And thirdly, real competition for the company will eventually arrive, perhaps from AMD, Intel, or even NVIDIA’s own customer base, who are all rushing to produce in-house alternatives to avoid paying these billions to Nvidia.”
James Ford, equity analyst at Charles Stanley, says: “NVIDIA’s stock surged 27% in May 2024 after delivering strong first quarter results, with impressive 262% year-on-year revenue growth. This was fuelled by soaring data centre demand, because companies are investing heavily in AI. There’s more demand than supply, which means prices can be sustained – and the company expects that demand to keep beating supply well into next year, meaning the firm’s growth is set to continue too.
“While competition is intensifying, it remains fragmented – with mixed results. History suggests different companies trying to double up and compete on their processes around semiconductor chips is inefficient and unsustainable. A more collaborative approach to research and development would be necessary to genuinely challenge NVIDIA’s entrenched leadership.
“So, at least for now, the company’s roadmap of new product launches should allow it to maintain its first place in the race, and to capture a large share of the data centre market. This should help it to maintain its path to profiting on the $1 trillion market opportunity it sees over the long-term.”
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