Nvidia (NASDAQ:NVDA) stock was worth just $146 on 30 December 2022. At the time of this writing, it’s selling at $726. That’s a gain of 397%.
The company now has a market cap of $1.79trn. To put that into perspective, that’s bigger than Amazon, which has a market cap of $1.76trn. What’s even more surprising is that over the last month alone, the shares have risen 22% in price.
I’m wondering, then, how much would I have if I’d invested £5k in the stock at the start of 2023?
Powerful past performance
My £5,000 invested in Nvidia at the start of 2023 would now be worth £24,850. I can safely say that’s an incredible amount of money to gain in a very short amount of time.
This is no surprise to me, considering Nvidia is one of the world’s most important companies that develops artificial intelligence (AI), including deep and machine learning.
For those who don’t know, Nvidia is helping to advance the ability of technologies to self-teach and even mimic human brain processes to do so.
The company is also a leader in graphics processing units (GPUs) and system-on-a-chip (SoC) technology, which is instrumental in advanced gaming, autonomous driving, and elite computer visuals for professionals.
And it has proven itself as one of the most critical companies involved in this based on its financial results. It has grown its earnings at a rate of 173% in just the last year.
Better late than never?
I think Nvidia could grow much more in the future. That’s true even when I consider the over-valuation concerns I have at the moment. After all, the AI market could grow annually by roughly 40% over the next decade, according to Bloomberg Intelligence.
However, the shares are priced at 36 times future earnings, but that’s similar to most high-tech companies like Google, Apple, and TSMC.
Nonetheless, I’m making sure not to invest too heavily. I think some diversification is warranted to protect me from any shocks that could hit the whole industry.
For example, worsening US-China relations would be awful for Nvidia shareholders as it is directly related to Taiwan’s TSMC, a focal point of international tensions.
Why I’m not investing right now
I’m not investing now, first, because Nvidia stock is expensive. At $726, I reckon most people would think twice about buying even one share in the business. Especially given the risks I noted above.
However, some brokers offer fractional shares. I think this might be a wise way to get smaller exposure to Nvidia. Personally, while I’m a technology researcher primarily, I tend not to put all my eggs in one basket.
I already own full shares in Tesla, Amazon, Google, Apple, Microsoft, and Salesforce. Perhaps Nvidia is next to add to my technology portfolio, but at this time, it’s simply on my watchlist.
