Missed Nvidia’s 2,400% Gain? Here’s What to Do Next.

Nvidia (NVDA 0.94%) The company’s stock has soared 2,400% over the past five years, driven not only by optimism about the company’s artificial intelligence (AI) chip business but also by real-world results. The company’s profits have climbed by triple digits quarter after quarter as AI customers rush to get the latest chip to power their projects.

The tech giant has been able to maintain its lead and pricing power because it offers the most powerful chips on the market. But lately, even as earnings continue to beat expectations, Nvidia’s stock has lost momentum. The stock fell 18% from the beginning of July to the first few days of August, and it has also stumbled in recent days. In fact, in one trading session this week, Nvidia lost $279 billion in stock value, the largest single-day decline for a U.S. company.

If you haven’t bought shares of this market giant and missed out on its previous explosive gains, you may be wondering what your options are right now. Is it too late to score a win for Nvidia, or should you buy this player on the decline? Let’s see what to do next.

Image source: Getty Images.

Why Nvidia Stock Surged

Let’s start by explaining why Nvidia has seen such growth. The company, which originally focused on selling graphics processing units (GPUs) for the video gaming market, realized that these powerful chips could be used in many other areas, including the fast-growing sector of artificial intelligence. Nvidia focused on this area when companies began investing in the technology, which resulted in huge revenue gains and exceptional stock performance.

At this early stage of AI, Nvidia has been able to generate massive growth: its data center revenue has gone from low levels to tens of billions of dollars in just a few years. As the technology advances, we may not see this level of growth at every stage of development. But overall, there is reason to be optimistic about Nvidia’s ability to significantly increase its revenue over time — and to experience periods of strong growth, such as when it releases major new products.

And one of those times could be just around the corner, with the release of the Blackwell architecture and the company’s most powerful chip ever. Blackwell comprises six breakthrough technologies, delivering huge advances in computing power, energy efficiency, networking, and security. While Nvidia’s products are known to be more expensive than its competitors, the company says the efficiency gains should translate into a lower total cost of ownership over time, meaning customers who spend more today could end up winning in the long run.

Nvidia is aiming to ramp up Blackwell production in the fourth quarter and even generate billions of dollars in revenue from the platform during that period. Demand for the system is skyrocketing, outpacing supply, so I’m optimistic about growth not only this year, but next year as well.

Nvidia’s Recent Decline

Now let’s talk about the recent decline in Nvidia’s stock price. Investors, worried about economic growth and the timing of potential interest rate cuts, have punished technology stocks in general. These companies and their stocks tend to suffer in a tough economy because it’s harder for them to grow in that type of environment. For example, investors may worry that if interest rates remain high, companies will cut back on technology spending.

But it’s important to consider the long term. There’s likely a lot to be gained by buying Nvidia stock today and holding it for the long term. After all, the Blackwell platform is expected to generate significant growth, and “other Blackwells,” as Nvidia CEO Jensen Huang has said, could follow suit in the years to come. Nvidia has committed to updating its GPUs every year, a key metric that should drive demand for these chips.

So while you may have missed out on Nvidia’s first wave of gains, you could still score a win in the future. That means buying Nvidia stock is a great move to make right now. Today, you can buy the stock for just 37 times forward earnings estimates, a very reasonable level considering Nvidia’s market leadership and constant innovation.

And even if the next chapters of Nvidia’s growth take longer than expected, that’s okay. When you’re investing for five to ten years, you have time on your side.