In recent years, stock splits have re-emerged as a popular strategy among companies, a trend reminiscent of the 1990s bubble. This tactical move comes into play typically after a company has experienced robust growth and seen its stock price soar. Such was the case for several major players in 2024, who have opted to split their stocks, signaling confidence in their business trajectories and paving the way for more accessible share prices for investors.
Prominent examples include Nvidia, which recently executed a 10-for-1 stock split set to take effect on June 7, 2024. Chipotle followed suit with a dramatic 50-for-1 split starting on June 25, 2024, while Broadcom and Super Micro Computer implemented 10-for-1 splits on July 12 and September 30, respectively. These companies share a common thread—a history of exceptional market performance.
Among the myriad of choices available to investors, Nvidia stands out as an exceptional prospect as the ideal stock to buy now. A key driver behind this recommendation is the burgeoning field of artificial intelligence (AI), which Nvidia is poised to dominate. But the company’s appeal transcends just trends; it’s about Nvidia’s visionary leadership under CEO Jensen Huang, who has a knack for foreseeing technological advancements and seizing new opportunities.
Nvidia revolutionized gaming with its graphics processing units (GPUs) back in 1999, but Huang’s foresight didn’t stop there. In 2006, Nvidia adapted its GPU technology for supercomputing, and today, it holds a staggering 98% market share in data-center GPUs. Moreover, Nvidia’s groundwork laid more than a decade ago positioned it to capitalize on the AI boom that emerged last year, showcasing the company’s role as a key player in the evolving tech landscape.
The financial statistics speak volumes about Nvidia’s remarkable performance. For instance, in the second quarter of fiscal 2025, the company reported unprecedented revenue of $30 billion, marking a 122% year-on-year increase. A significant portion of this growth can be attributed to record data-center earnings of $26.3 billion, reflecting a staggering 154% leap in revenue. Notably, diluted earnings per share surged by 168%, illustrating substantial profitability.
Looking ahead, Nvidia’s management anticipates continued growth, projecting revenues around $32.5 billion, which indicates an impressive year-over-year growth rate of 79%. While this pace is expected to slow compared to previous quarters, it remains a commendable feat in a rapidly changing market environment.
Now, you may wonder if the opportunity to invest in Nvidia has passed, given its meteoric rise; the stock has advanced a staggering 837% since last year. However, we are still in the nascent stages of AI development, with many use cases yet to be fully realized. Skeptics often cite early growing pains in AI technology as evidence of its immaturity, but as hurdles are overcome, the market should witness even greater growth.
The potential of the generative AI market is vast, with estimates suggesting it might reach a staggering $1.3 trillion by 2032 and projections from leading analysts forecasting potential revenues ranging from $13 trillion to $37 trillion by the end of the decade. This potential opens a frontier for Nvidia to capture an ever-expanding share in a vibrant marketplace.
Critics of Nvidia may highlight its high price-to-earnings ratio—64 times earnings—arguing that it’s overvalued. However, when evaluating Nvidia’s potential for growth, it’s essential to compare its 33 times projected earnings for fiscal 2026 to the S&P 500’s 30 times earnings. So, while Nvidia’s pricing may appear lofty, the growth potential justifies the premium as analysts estimate a 52% annual growth in profits over the next five years.
This comprehensive analysis positions Nvidia not just as a stock to watch but as a premier investment opportunity amid a rapidly changing technological landscape. With ongoing innovations and Huang’s leadership, Nvidia is well-equipped to meet future demands and enjoy continued success.
In closing, the data reveals one undeniable truth: if you’re looking to invest in a stock with extraordinary growth potential and a solid foundation, Nvidia is undeniably at the forefront of that list. Seize the moment before the next big breakthrough transforms the investment landscape further. This is an opportunity you won’t want to bypass.