This week has seen Nvidia (NASDAQ: NVDA) deliver yet another superb set of numbers. Its $47bn in revenue for the second quarter represented an increase of 56% year on year. Diluted earnings per share did even better, moving up 61%. Nvidia stock this week hit an all-time high.
So, what would £10,000 invested in Nvidia at the start of the year now be worth?
Strong performance
Since the beginning of 2025, Nvidia stock has gone up by 34%. So, excluding any currency movements, a £10k investment back at the start of January would now be worth around £13,413.
That is an impressive return in such a relatively short period of time. During that period, the US S&P 500 index has gone up a more modest (though still impressive) 11%.
The S&P 500 also hit an all-time high this week. Part of that is actually due to the strong performance of Nvidia stock, as the company’s $4.4trn market capitalisation makes it the biggest member of the index by size.
That 34% gain is only the stock price movement: Nvidia also pays a dividend.
But, with a current yield of 0.02%, a £10k investment would only have earned a pound or so so far this year. Better than nothing, but I think it is fair to say that the Nvidia investment case right now is focused on growth not income.
I missed my chance
At the start of the year, Nvidia stock was too pricey for my tastes.
A sharp fall in April made it more attractively priced. I weighed up whether to invest then, but the risks from uncertainty around US tariffs and export rules had increased – I still see them as significant risks for Nvidia today. In April, the US government informed Nvidia that it needed a license to export its H20 product to China, the market for which it was primarily designed.
Nvidia stock is up 82% since the second half of April, an even more impressive performance than the year-to-date number.
But it also now means the share trades on a price-to-earnings (P/E) ratio of 58. It was too pricey for me at a much lower P/E ratio in April and it remains too expensive for my tastes now.
Things could keep getting better
Still, as the record high price this week shows, many investors obviously continue to reckon that Nvidia is fairly priced or even a bargain.
That could turn out to be the case. The strong quarterly earnings per share growth suggests that the prospective P/E ratio at the full-year level could be well below 58.
Nvidia continues to have the same strengths I applauded in April, as the latest numbers demonstrated by the bucketload. Its proprietary technology, large installed customer base and sizeable cash generation potential are impressive. Free cash flow in the first half of this year was $40bn, representing 39% year-on-year growth.
But the $4.4trn market cap makes me uncomfortable given some of the risks. One is a slowdown in AI-related chip spending once companies have completed their initial buildouts and start to assess whether AI is giving them sufficient return on investment.
If Nvidia’s incredible performance continues, the stock price could move even higher. But for now at least, I will not be along for the ride.
