February was nothing short of amazing for Nvidia (NASDAQ: NVDA) stock. During the month, $431bn was added to its market cap.
On 21 February, $272bn alone added to its value. For context, that’s more than FTSE 100 stalwarts BP, Unilever, and GSK combined!
Its share price rocketed a whopping 25.6% across the month. Year to date, the stock is up 64.2%. In the last 12 months, it has risen 239.3%. If I’d purchased Nvidia shares five years ago, I’d be sitting on a monumental 1,923.4% gain.
As far as returns come, it doesn’t get much better. And that has me thinking.
I own some Nvidia shares. As I write, I’ve made an 86.8% gain on my investment. But with the market clearly bullish on the future of the company, should I be rushing to buy more?
A stellar performance
The main reason for its surge was the release of its final quarter and full-year results, which blew analysts’ expectations out of the water.
In brief, it posted record revenues for the year, rising to $60.9bn, 126% higher than in 2022. Net income also climbed by an incredible 581%.
Similarly, the fourth quarter saw it post a record quarterly revenue of $22.1bn. Sales for its Data Center jumped 409% year over year.
Nvidia can’t seem to slow down.
Market leader
But where do we go from here? The stock is one of the hottest on the market right now. Can it sustain this incredible form?
There’s certainly an argument to be made that it will. That’s especially after CEO and founder Jensen Huang said the AI (artificial intelligence) industry is now at its “tipping point”.
AI has boomed in the last few years. And as a front-runner, I think Nvidia could be in store for more gains. It’s best known for manufacturing graphics processing units (GPUs). It’s forecasted the firm has between a 90% and 95% market share. Companies including Meta, Tesla, and Microsoft are just a few of the customers rushing to buy Nvidia’s GPUs.
Risks remain
But it’s not all plain sailing, although it might seem that way.
The stock has soared. But that always comes with a risk. Apollo Global Management recently said that the top 10 largest companies in the S&P 500, which includes Nvidia, are “more overvalued than the top 10 companies were during the tech bubble in the mid-1990s”. With that, there’s the risk that we see large volatility.
I must also remember that this is a fast-evolving industry. Nvidia has burst onto the scene. What’s to say one of its competitors doesn’t do the same and steal the limelight?
Long-term vision
However, I’m excited about where Nvidia could head in the next five to 10 years. And even further for that matter.
I think there’s potential we see big fluctuations in its share price in the times ahead. The market now has large expectations for the business, so any signs of slowdown could panic some investors.
But Nvidia is a market leader. In the years and decades to come, I’m expecting the business to keep thriving. I’m keen to pick up some more stock.
This post was originally published on Motley Fool
