Is Nvidia a Millionaire-Maker Stock?
Over the last few decades, the American technology sector has made boatloads of millionaires -- not only for founders and CEOs, but also for the thousands of regular people who work at these companies or buy their stock. With shares up by over 23,000% over the last decade, Nvidia (NASDAQ: NVDA) is the quintessential example of this phenomenon.
But as we all know, past performance doesn't guarantee future returns. And with a market cap of $3.2 trillion, Nvidia is already one of the largest companies on Earth, giving it less room to grow. Let's dig deeper to see what the future might bring for this legendary chipmaker.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Is AI becoming mainstream?
While Nvidia started its life focusing on consumer video game graphics and cryptocurrency mining, both of those once-core operations have become totally overshadowed by generative AI. As of the fourth quarter, the data center segment (where Nvidia accounts for sales of cutting-edge AI chips) represented a jaw-dropping 91% of its $39.3 billion in sales for the period.
This level of concentration means that a large portion of Nvidia's valuation is tied to the prospects of this one industry. If AI tech exceeds expectations, so will Nvidia. But if the sector falls flat, well -- you know the drill. Right now, it still feels too early to know how things will play out.
Analysts at Jeffries seem wildly optimistic. Their research suggests that three-quarters of businesses already use generative AI in at least one function, and they expect it to drive $1.1 trillion in revenue by 2028.
But investors shouldn't necessarily take these projections at face value. Even if AI becomes a part of mainstream life, there is no guarantee that big profits will follow. And this puts Nvidia's clients in a tough spot.
AI companies are burning through money.
Despite the hype, generative AI remains wildly unprofitable. While giants like Alphabet and Meta Platforms can hide their AI losses within their vast research and development budgets, the scale of the problem is much clearer with pure-play AI companies like OpenAI, the maker of ChatGPT.
The Economist reports that while the start-up's 2024 revenue tripled to $3.7 billion, losses ballooned to $5 billion. And while OpenAI's management believes it can achieve $12 billion in cash flow by 2029, this is far from guaranteed due to the intense competition in the industry.
Chinese open-source rival DeepSeek shows that competitive AI models can be created (arguably) at a fraction of the cost of their U.S. counterparts, which means early leaders may not have much of an economic moat, especially when the technology matures and the rate of model improvement slows. If profit potential shrinks, so will the market for Nvidia's expensive hardware.
Nvidia will also face challenges on the hardware side of the industry as companies seek to diversify their supply chains. In April, the Trump administration effectively banned the company from selling its h20 chips to Chinese clients. While Nvidia has already started work on a new compliant chip, it is unclear if Chinese companies will be willing to build their businesses around Nvidia hardware, given the unpredictability of U.S. regulations. Rivals like Huawei are working to take market share.
The easy money has already been made
Nvidia is a big player in a potentially transformational industry, so there is little doubt it can continue to outperform the market over the long term (even though there will be short-term volatility).
That said, the easy money has already been made. New investors shouldn't expect this legendary chipmaker to repeat the multibagger returns it enjoyed over the previous decades. You can attribute the slower progress to the challenging dynamics on both the software and hardware sides of the AI industry.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!*
Now, it's worth noting Stock Advisor 's total average return is957% — a market-crushing outperformance compared to167%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of May 19, 2025
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Winnipeg Free Press
an hour ago
- Winnipeg Free Press
Renewed marketing, product development keys to improved pork sales: report
Opinion Canadian pork producers are likely to chew slowly as they digest a report released this week by one of the largest agricultural creditors in the U.S. While the paper by CoBank focuses on U.S. pork production and consumption trends, the North American hog and pork industries are highly integrated. Whatever happens in this report's wake, if anything, will spill across the border to influence the Canadian sector. Nearly one-quarter of the pigs born in Canada are sent to the U.S. for feeding and slaughter. Sixty per cent of those live hog exports are weanlings sent to U.S. feeding operations. Canada also exported US$1.7 billion in pork products to the U.S. in 2024, while importing US$850 million back. JOHN LOCHER / THE ASSOCIATED PRESS FILES Pigs eat from a trough at the Las Vegas Livestock farming operation in Nevada CoBank says the U.S. industry's continued reliance on export sales to places like Mexico, China, South Korea and Canada for nearly a quarter of its production is becoming too risky because of 'new trade policies' creating more volatility in global trade. Even without U.S. President Donald Trump's tariffs in the mix, trade with China has fallen sharply since record sales in 2020. That country's domestic production rebounded faster than expected following a devastating outbreak of African swine fever in 2018. Sales to China in 2024 were less than a quarter of the kilograms sold five years ago. Bacon has achieved a cult-like following and sausage products have gained appeal, which has doubled the market prices for the pork bellies and trimmings used to make them. However, the 'muscle cuts,' such as pork loins and hams, are often discounted because they aren't as convenient and consumers often don't know how to cook them. 'Sluggish exports could mean more pork loins in domestic markets, and U.S. consumers have difficulty cooking 'the perfect pork chop,'' the report says. Exports of so-called 'variety meats,' such as livers, hearts, kidneys, tongues, stomachs, snouts, ears, feet and tails, were worth $1.3 billion in 2024, but they aren't popular menu items in North America. 'Any trade barriers in place for countries that purchase variety meats could cause implications for the U.S. pork sector because those products have extremely limited demand in the U.S.,' CoBank says. The industry has launched campaigns focused on convincing consumers they need more pork on their forks, something the Canadian sector has been working on, too. Even though Canadian pork consumption is much lower, at about 16 kg per capita, recent marketing efforts have achieved increases of just under 15 per cent. CoBank warns increasing U.S. consumption, which has remained static at about 22 kg per capita since the 1970s, will be challenging because the parts of the animal the industry currently exports are such a hard to sell to American consumers. 'If the U.S. consumer is to reimagine pork, the pork industry may need to make drastic changes, including recalibrating the genetic hog makeup and showcasing different cuts at retail and through food service.' CoBank cites Kansas State University research that names taste as the primary driver for protein purchases. When it comes to animal protein, the flavour is in the fat. Weekday Evenings Today's must-read stories and a roundup of the day's headlines, delivered every evening. That's a problem for a sector that heeded the low-fat messaging of yesteryear and shifted genetic focus in selecting breeding stock towards lean carcass weights, rapid growth and feeding efficiency. CoBank says the industry needs to rethink that strategy if it wants to convince consumers to eat more pork. It also must put more effort into marketing and new product development focused on eating quality and convenience. 'The lean hog formulation that was adopted by the broad bulk of U.S. producers more than two decades ago has largely influenced the pork that U.S. consumers are offered today,' the report says. 'This has left something to be desired when comparing pork chops to beef steaks, often with an overcooked chop delivering a bad experience.' CoBank is signalling a shift in market direction that has obvious implications for the Canadian sector. When it's time to make a change, the consolidated and vertically integrated industry will be able to pivot relatively quickly. However, with all the moving parts to this equation, now is not the time. Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@ Laura RanceColumnist Laura Rance is editorial director at Farm Business Communications. Read full biography Our newsroom depends on a growing audience of readers to power our journalism. If you are not a paid reader, please consider becoming a subscriber. Our newsroom depends on its audience of readers to power our journalism. Thank you for your support.
CTV News
an hour ago
- CTV News
City Council approves splitting of LDE into two organizations to operate Agri-Food Hub and Trade Centre
Two new entities will be formed to operate the Agri-Food Hub and Trade Centre going forward—one focused on agriculture, the other on managing events.
Globe and Mail
2 hours ago
- Globe and Mail
States are rolling out red carpets for data centers. But some lawmakers are pushing back
HARRISBURG, Pa. (AP) — The explosive growth of the data centers needed to power America's fast-rising demand for artificial intelligence and cloud computing platforms has spurred states to dangle incentives in hopes of landing an economic bonanza, but it's also eliciting pushback from lawmakers and communities. Activity in state legislatures — and competition for data centers — has been brisk in recent months, amid an intensifying buildout of the energy-hungry data centers and a search for new sites that was ignited by the late 2022 debut of OpenAI's ChatGPT. Many states are offering financial incentives worth tens of millions of dollars. In some cases, those incentives are winning approval, but only after a fight or efforts to require data centers to pay for their own electricity or meet energy efficiency standards. Some state lawmakers have contested the incentives in places where a heavy influx of massive data centers has caused friction with neighboring communities. In large part, the fights revolve around the things that tech companies and data center developers seem to most want: large tracts of land, tax breaks and huge volumes of electricity and water. And their needs are exploding in size: from dozens of megawatts to hundreds of megawatts and from dozens of acres up to hundreds of acres for large-scale data centers sometimes called a hyperscaler. While critics say data centers employ relatively few people and pack little long-term job-creation punch, their advocates say they require a huge number of construction jobs to build, spend enormous sums on goods and local vendors and generate strong tax revenues for local governments. In Pennsylvania, lawmakers are writing legislation to fast-track permitting for data centers. The state is viewed as an up-and-coming data center destination, but there is also a sense that Pennsylvania is missing out on billions of dollars in investment that's landing in other states. 'Pennsylvania has companies that are interested, we have a labor force that is capable and we have a lot of water and natural gas,' said state Rep. Eric Nelson. "That's the winning combination. We just have a bureaucratic process that won't open its doors.' It's been a big year for data centers Kansas approved a new sales tax exemption on goods to build and equip data centers, while Kentucky and Arkansas expanded pre-existing exemptions so that more projects will qualify. Michigan approved one that carries some protections, including requirements to use municipal utility water and clean energy, meet energy-efficiency measures and ensure that it pays for its own electricity. Such tax exemptions are now so widespread — about three dozen states have some version of it — that it is viewed as a must-have for a state to compete. 'It's often a nonstarter if you don't have them, for at least the hyperscalers,' said Andy Cvengros, who helps lead the data center practice at commercial real estate giant JLL. 'It's just such a massive impact on the overall spend of the data center.' Zoning, energy fights often frustrate developers In West Virginia, lawmakers approved a bill to create 'microgrid' districts free from local zoning and electric rate regulations where data centers can procure power from standalone power plants. Gov. Patrick Morrisey, a Republican, called the bill his 'landmark policy proposal' for 2025 to put West Virginia 'in a class of its own to attract new data centers and information technology companies.' Utah and Oklahoma passed laws to make it easier for data center developers to procure their own power supply without going through the grid while Mississippi rolled out tens of millions of dollars in incentives last year to land a pair of Amazon data centers. In South Carolina, Gov. Henry McMaster signed legislation earlier this month that eased regulations to speed up power plant construction to meet demand from data centers, including a massive Facebook facility. The final bill was fought by some lawmakers who say they worried about data centers using disproportionate amounts of water, taking up large tracts of land and forcing regular ratepayers to finance the cost of new power plants. 'I do not like that we're making customers pay for two power plants when they only need one,' Senate Majority Leader Shane Massey told colleagues during floor debate. Still, state Sen. Russell Ott suggested that data centers should be viewed like any other electricity customer because they reflect a society that is 'addicted' to electricity and are 'filling that need and that desire of what we all want. And we're all guilty of it. We're all responsible for it.' Some lawmakers are hesitant In data center hotspots, some lawmakers are pushing back. Lawmakers in Oregon are advancing legislation to order utility regulators to ensure data centers pay the cost of power plants and power lines necessary to serve them. Georgia lawmakers are debating a similar bill. In Virginia, the most heavily developed data center zone in the U.S., Gov. Glenn Youngkin vetoed a bill that would have forced more disclosures from data center developers about their site's noise pollution and water use. In Texas, which endured a deadly winter blackout in 2021, lawmakers are wrestling with how to protect the state's electric grid from fast-growing data center demand. Lawmakers still want to attract data centers, but a bill that would speed up direct hookups between data centers and power plants has provisions that are drawing protests from business groups. Those provisions would give utility regulators new authority to approve those agreements and order big electric users such as data centers to switch to backup generators in a power emergency. Walt Baum, the CEO of Powering Texans, which represents competitive power plant owners, warned lawmakers that those provisions might be making data center developers hesitant to do business in Texas. 'You've seen a lot of new announcements in other states and over the last several months and not as much here in Texas," Baum told House members during a May 7 committee hearing. "I think everybody right now is in a waiting pattern and I worry that we could be losing to other states while that waiting pattern is happening.'
