Since 4 April, Nvidia stock’s surged almost 70%! That means an investor that sunk £10,000 into the stock just three months ago would have netted almost £7,000 in profit.
That equates to over £2,300 in passive income a month — not bad!
It’s an impressive recovery, considering the stock fell 20% in the first quarter of 2025. Now the world’s most popular graphics processing unit (GPU) manufacturer is fully recovered — and then some. It’s currently trading near record highs around $160.
It’s bizarre to think that components originally designed for computer games are now powering the most advanced data centres in the world.
So how did Nvidia get here — and where to next?
From gaming… to global domination
Founded in 1993 by Jensen Huang, Chris Malachowsky and Curtis Priem, Nvidia began life building GPUs for the fledgling PC gaming industry. The firm’s breakthrough arrived in 1999 with the launch of the GeForce 256, marketed as the world’s first GPU, which set the standard for consumer graphics.
But Nvidia’s story didn’t stop with gaming. Spotting the parallel processing potential of GPUs, the company pioneered the use of its chips in high-performance computing and machine learning. By the mid-2010s, Nvidia was at the forefront of artificial intelligence (AI) hardware – a move that has paid off spectacularly. Today, its processors power everything from ChatGPT to autonomous vehicles and datacentres worldwide.
That journey has made Nvidia stock a legend in investing circles. Last week (27 June), it surpassed Microsoft to become the world’s largest company by total market capitalisation, worth over $3.3trn. Few would have predicted that a modest graphics chip designer from California would one day eclipse the likes of Apple and Microsoft.
Financials and latest performance
In its most recent quarterly results (Q1 2025), Nvidia reported revenue of $44bn, up an impressive 70% year on year, with data centre sales — largely driven by AI demand — soaring by 73%. Net income exploded to $18.7bn, giving it a net margin of 52%. That’s profitability on a scale rarely seen.
The balance sheet also looks pristine. Nvidia holds over $50bn in cash, with a debt-to-equity ratio of 0.12, which provides huge financial flexibility.
In terms of key valuation metrics though, it’s anything but cheap. It trades on a price-to-earnings (P/E) ratio of around 50 and a price-to-book (P/B) ratio near 45, making it one of the most expensive of the mega-caps on a traditional basis. However, bulls argue that given its explosive growth and near-monopoly in high-end AI chips, it still has plenty of room to grow.
There are some risks to consider though. Nvidia insiders, including Huang, have sold more than $1bn worth of stock over the past year, with over $500m offloaded in June alone. This could simply be prudent diversification. After all, Huang’s net worth is heavily tied to Nvidia’s fortunes. It doesn’t necessarily indicate trouble ahead, but it’s something investors should watch. Heavy insider selling can sometimes be a red flag if it signals waning confidence.
But with AI and data centre demand only growing, it still looks like a stock worth considering. If I didn’t already have exposure to the company through various investment trusts, I’d buy some shares today.
