November 30, 2022 could go down in history as a pivotal day in technological advancement. It marked the debut of ChatGPT, a breakthrough in artificial intelligence from OpenAI. This AI has astounded many since its inception, with ChatGPT quickly becoming one of the fastest-growing and most adaptable apps, reaching an impressive 100 million monthly active users just two months after its launch.
A significant beneficiary of this AI revolution has been Nvidia. The close relationship between ChatGPT and Nvidia has been mutually beneficial, propelling both entities to new heights of progress and development. While investing in Nvidia stock when ChatGPT was first launched would have been a shrewd move, let’s delve into why Nvidia has been such a major beneficiary of the AI boom before examining how much the stock has returned since then.
Nvidia’s Leadership in the AI Boom
Nvidia’s claim to fame dates back to 1999 when the company invented GPUs, a technology it has dominated ever since. Originally designed for gaming, GPUs have found success in other areas such as cryptocurrency mining and autonomous driving. Now, with the rise of artificial intelligence, GPUs are in the spotlight.
Compared to CPUs, GPUs excel at technical calculations, offering superior performance for AI training, inference, and other accelerated computing applications. Nvidia CEO Jensen Huang envisions accelerated computing as the future of data-center infrastructure, and the company’s GPUs have played a pivotal role in training AI models. GPU performance has increased exponentially over the years, making them a cost-effective choice over alternatives like CPUs.
Nvidia’s GPUs have consistently outperformed competitors in benchmarks like MLPerf since 2019, giving the company a virtual monopoly in the data-center GPU market with an estimated 98% share. Despite new competitors like AMD and Intel entering the market, Nvidia’s dominance in AI GPUs remains unchallenged, helping the company achieve a market capitalization of over $2 trillion.
Nvidia’s Post-ChatGPT Surge
Following the launch of ChatGPT on November 30, 2022, Nvidia’s stock price surged by 8.2% to close at $169.15. If you had invested in Nvidia on that day, your investment would have grown by 428% as of March 12, turning $10,000 into $52,800. In comparison, the S&P 500 index gained only 26.2%, while the Nasdaq Composite rose by almost 41% during the same period.
Nvidia’s stock initially dipped at the end of 2022 but rallied in early 2023 as the AI boom gained momentum. The stock surged in May after exceeding Wall Street’s revenue expectations, driven by growing AI demand and expansion into new markets.
Is It Still a Good Time to Invest in Nvidia?
Despite its remarkable growth, Nvidia’s valuation, as measured by the forward price-to-earnings (P/E) ratio, has actually decreased during this period due to surging profits from AI demand. While Nvidia’s stock may remain volatile, especially in the AI sector, concerns about a potential bubble appear exaggerated. The company’s dominance in AI GPUs and its ongoing innovation suggest that it will continue to lead the market.
In conclusion, investing in Nvidia may still be a sound decision, but investors should exercise caution and conduct thorough research before making any investment decisions.
