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Ever play video games on an XBox console? If so, you can thank NVIDIA, the computer technology company hailing from Santa Clara, California.
Nvidia is the chief rival to Advanced Micro Devices (AMD) in manufacturing graphics processing units, but the company has a number of different initiatives, including the exploration of artificial intelligence.
Nvidia has been one of the NASDAQ’s hottest stocks in the last few years, going from $25 to $290 in just over two an
Ever play video games on an Xbox console? If so, you can thank NVIDIA, the computer technology company hailing from Santa Clara, California.
NVIDIA is the chief rival to Advanced Micro Devices in manufacturing graphics processing units (GPUs), but the company has a number of different initiatives, including the exploration of artificial intelligence (AI).
NVIDIA has been one of the Nasdaq exchange’s hottest stocks in the last few years, going from $125 to $380 in just over two and a half years. Despite this recent rise, many analysts think the stock has more room to run as its stock price breaks new all-time highs.d a half years. Despite this incredible rise, many analysts think the stock has more room to run as it sits only a few dollars off its all-time high.
What is Nvidia?
In 1993, three computer programmers sat down to discuss the future of their industry. Jensen Huang, Chris Malachowsky and Curtis Priem came from varied backgrounds with different companies, but they shared a few ideas about where computer technology was headed.
Huang was a former designer with Advanced Micro Devices Corp. (NASDAQ: AMD), while Malachowsky and Priem were engineers with Sun Microsystems. All three agreed that graphics-based computing was going to be the next big thing and founded the company to push toward this goal.
NVIDIA’s founders believed that computers would evolve to become potent gaming and media consumption machines. In 1999, they presented the world with their GPU, a special type of circuit that increased the speed of image rendering on computer systems.
Called the GeForce 256, this GPU had the capability of processing 10 million polygons per second. By increasing the graphic manipulation speed, NVIDIA set itself up to be a player in several industries, especially game consoles and computer workstations.
Today, NVIDIA technology can be found everywhere. It sells products designed to perform the following tasks:
- Consumer-oriented graphics processing
- Professional design and content creation
- Mobile processing
- High-end image rendering for scientific industries
NVIDIA has also recently become a staple in the exploding AI industry because as deep learning systems grow in strength so will the demand for NVIDIA's GPUs.
History of Nvidia Stock
NVIDIA filed its IPO on January 22, 1999, (shortly before the release of its first GPU) with shares priced at $12.The IPO came to market only a few months before the beginning of the dot-com meltdown, which sent many tech stocks plummeting without recovery for several years.
By October 2002, NVIDIA shares were trading below $3. But unlike many of its computer-driven competitors, NVIDIA survived the dot-com bubble and continued to grow and innovate.
After pushing close to the $40 mark in November 2007, NVIDIA shares were hit again by the Great Recession, and prices receded back to the single digits. After another recovery, the stock traded sideways for a couple of years until the company announced its first-ever dividend in November 2012.
Four more years of sideways trading followed until the calendar flipped to 2016 and NVIDIA’s stock exploded. Between February 2016 and February 2017, NVIDIA stock went from $24.75 per share to $113.62 per share.
It had doubled again to $230 by January 2018 and today sits around $380. If you had purchased $10,000 worth of NVIDIA shares at the start of 2016 and didn’t sell, you’d be sitting on over $152,000 today.
Pros of Buying NVIDIA Stock
Here are a few reasons why you might consider adding NVIDIA stock to your portfolio.
NVIDIA is still run by founder and CEO Jensen Huang and scores top marks as one of the best places to work in the tech industry.
A Top Name in its Sector
The company has become the powerhouse of the semiconductor industry with its strong product line and frequent earnings beats. NVIDIA GPUs can be found anywhere from video game consoles to deep-learning AI systems.
Strong Future Ahead
NVIDIA isn’t content to dominate the semiconductor space. It is heavily invested in a GPU-based deep learning system, which is designed to help computers parse data in the same manner as human beings. Between this sector, the nearing implementation of driverless cars and the rise of general AI, the GPU economy does not seem to be slowing any time soon.
Cons of Buying NVIDIA Stock
Thinking of buying NVIDIA shares? The outlook is good, but not entirely rosy.
Rivals like AMD have been a challenge to NVIDIA’s superiority, but their advances into deep learning and driverless cars also put them in the crosshairs of companies like Google, Uber and Qualcomm.
Expensive Share Price
On a fundamental basis, NVIDIA shares are selling at a high premium with a forward P/E over 39 and a price-to-book value near 43.
Cyclical Nature of the Industry
The cyclical nature of the semiconductor industry makes the company's revenue and profits dependent on the overall health of the industry. During downturns, demand for NVIDIA's products may decrease, leading to lower revenue and profits.
This volatility can make it difficult for investors to predict the company's future performance and may lead to fluctuations in stock price.
How To Buy Nvidia Stock
If you’ve decided to add NVIDIA stock to your portfolio, follow these steps to acquire shares.
1. Decide How Much You Want to Invest in NVIDIA
The first step in an investment strategy is deciding how much you want to spend. Putting too much money into one stock can be risky, even with a stock performing as well as NVIDIA’s. Decide what percentage of your portfolio should be made up of NVIDIA shares before going to your brokerage.
2. Find a Broker with Shares Available
You’ll need a brokerage account to buy NVIDIA shares. On the company’s investor website, lots of information about NVIDIA’s finances is available, along with contact info for the board of directors. You cannot purchase shares directly from the company. If you’re having trouble deciding on a brokerage, check out Benzinga’s list of the best-ranked online brokers.
3. Place Your Order
After you’ve decided how much to invest and which broker you’ll get NVIDIA stock from, it’s time to place your order via your trading account. Choose from either a limit order or a market order to acquire shares from your broker. Note that a limit order will only go through once your specified price is reached. With a market order, your trade will go through immediately at the current market price.
Best Online Brokers
Here's a short list of Benzinga’s top picks when it comes to online brokers that provide access to buying NVIDIA stock.
NVIDIA’s Rising Dominance
NVIDIA has been a front-running semiconductor stock on the Nasdaq exchange since the start of 2016 and currently shows no signs of losing steam. The company has a bright future in several different technology sector areas, including AI. If NVIDIA and other AI companies in need of their hardware continue to make breakthroughs with AI and deep learning platforms, the stock could move even higher.