My Nvidia stock’s up 107%. What should I do?

Nvidia stock’s been on a surge lately and this Fool has capitalised on it. But is it time to sell? Here, he explains why he’s holding.

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Image source: NVIDIA

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I bought some Nvidia (NASDAQ: NVDA) stock last year. Since then, it’s been on a tear. Today, I’m sitting on a 107.8% gain.

In the 12 months, the artificial intelligence (AI) star is up 281.1%. This year alone, it’s climbed 81.7%, fuelled by another set of impressive results.

What should I do now?

Time to sell?

Well, I’ve a few options. Firstly, I could sell all of my Nvidia shares. I’ve near enough doubled my money. If every stock I bought proved to be fruitful, I’d find investing a lot easier. Doing this makes sense. I shouldn’t be greedy, right?

Well, maybe. But there are other options I could explore. I could partially exit my position. That way, I’d be able to reinvest my profits into other companies that would offer me exposure to the AI industry. I have a few on my radar, including names such as Scottish Mortgage Investment Trust, so this could be a smart move.

But what if I think Nvidia is destined to keep rising? Today, a share in the company costs just over $875. Some analysts expect it to break the $1,000 barrier.

More gains to come?

There’s certainly a case to be made for this to happen. AI’s boomed in the last few years. Nvidia is a frontrunner in the industry. In its latest results, founder and CEO Jensen Huang said AI was at its “tipping point”.

The growth the business has produced in recent times has been nothing short of exceptional. Revenue for last year rose 126% to $60.9bn. Net income also soared a whopping 581%.

That’s seriously impressive. And some believe this is just the start for the company. This year, its estimated revenues could grow another 80%.  

A bubble waiting to burst?

But should I be concerned about the hype surrounding the business? There’s fear among investors that the stock’s in a bubble. Its gains have been sublime. But are they sustainable?

With that in mind, could it just be market sentiment and investor hype driving the stock? For example, in the last week, Nvidia has risen 4.4%. But on 8 March, it finished the day 5.6% down. That’s arguably not the sort of large share price swings you’d expect from a company with a $2.2trn market-cap.

There are other threats too. Competition is one. US-China relations and the impact this could have on the firm are also worth considering.

My move

I won’t be selling my Nvidia stock. But I’m cautious of adding to my position right now.

I’m happy with the exposure I have. I’m bullish on the long-term future of the business. However, there’s plenty of attention surrounding Nvidia at the moment. That can drive the stock up, as has been the case. But I’m also wary of a recoil. Could it be that Nvidia has gone too far, too soon?

Investors have come to expect so much from the business. Any sign of a slowdown could spell trouble for the stock. I’ll be sitting tight, for now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough has positions in Nvidia. The Motley Fool UK has recommended Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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