Nvidia's stock rose more than 800% between 2019 and 2024, turning it into one of the most talked-about names in investing. But a stock that has already run that far raises a fair question: is there still room to grow, or is the easy money gone?
This article won't tell you to buy or sell Nvidia. What it will do is lay out the key factors so you can make a more informed decision.
What Is Nvidia?
Nvidia (ticker: NVDA) designs graphics processing units, better known as GPUs. These chips were originally built for video games, but they turned out to be exceptionally good at running the math behind artificial intelligence models.
Today, major cloud providers like Amazon, Google, and Microsoft spend billions of dollars buying Nvidia GPUs every year. That demand has made Nvidia one of the largest companies in the world by market capitalization.
How the AI Boom Drives Revenue
Nvidia's data center segment, which sells chips to AI companies and cloud providers, now generates the majority of its revenue. When tech giants race to train and run large AI models, they need more chips, and Nvidia makes the chips they prefer.
This creates a real tailwind. AI infrastructure spending is expected to keep growing for years. Nvidia also benefits from a software ecosystem called CUDA that makes developers reluctant to switch to competing hardware.
That said, tailwinds can slow. Competition from AMD, Intel, and custom chips built by Google and Amazon is increasing. No monopoly lasts forever.
Valuation and the Price-to-Earnings Ratio
A stock's price-to-earnings ratio tells you how much investors are paying for each dollar of profit. As of early 2026, Nvidia's forward P/E sits well above the S&P 500 average, which has historically hovered around 20-25x earnings.
A high P/E means the market already expects strong future growth. If Nvidia delivers, the stock can keep rising. If growth disappoints, even slightly, the stock can fall sharply. This is the core tension in owning a high-multiple stock.
A useful comparison: during the dot-com bubble, many tech stocks traded at extreme multiples and then dropped 80-90% when expectations reset. Nvidia is profitable today, which is different, but the valuation risk is still real.
Volatility: What to Expect
Nvidia regularly moves 5-10% in a single day on earnings reports or news events. In 2022, the stock fell roughly 65% from peak to trough as chip demand softened.
If you invest $1,000 in NVDA, you should be comfortable watching that become $350 on a bad year and not panic-selling. Volatility is not a reason to avoid a stock, but it is a reason to size your position carefully.
A common approach is to allocate only a portion of your portfolio to single stocks like Nvidia and keep the rest in diversified index funds. Understanding the difference between owning one stock and owning a fund is key to building a balanced portfolio.
How to Start Investing in Nvidia
If you decide Nvidia fits your risk tolerance and time horizon, you can buy shares through a brokerage account. Robinhood lets you buy fractional shares of NVDA, which means you can invest $50 or $500 without needing to buy a full share. There are no commission fees for stock trades.
Robinhood
Robinhood
Robinhood is a trading platform that brings stocks, ETFs, options, futures, prediction markets, crypto, and retirement accounts together in one app.
Standout feature
One platform for stocks, ETFs, options, futures, prediction markets, and crypto
Fees
$0 commission on stocks, ETFs, and options.
Pros
Zero-commission trading on stocks, ETFs, and options
Cons
Best perks (high APY, lower margin rates) require Gold subscription ($5/month)
Risks to Keep in Mind
Before investing, consider these risks:
Export restrictions. The U.S. government has limited Nvidia's ability to sell its most advanced chips to China. China has been a meaningful revenue source, and tighter restrictions can reduce future growth.
Customer concentration. A small number of large cloud companies buy a large portion of Nvidia's output. If any of them slow spending or switch suppliers, the impact on revenue can be significant.
Chip cycles. The semiconductor industry has always been cyclical. Demand surges, companies overbuild capacity, and then orders slow. Nvidia is not immune to this pattern.
New entrants. Startups and established tech giants are working on AI chips designed to reduce dependence on Nvidia. These projects take years, but they represent a long-term competitive threat.
Should You Invest?
This is a personal decision that depends on your financial situation, time horizon, and comfort with risk. A few questions worth asking yourself:
- Can you hold for at least 3-5 years without needing this money?
- Are you already building a diversified base with index funds?
- Could you handle a 50% drawdown without selling?
If you answered yes to all three, a modest position in Nvidia may fit your plan. If you answered no to any of them, starting with a broader index fund may serve you better. Many beginners find it useful to establish their core portfolio before adding individual stocks.
This article is for educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results.
Frequently Asked Questions
Is Nvidia a good investment for beginners?
Nvidia can be part of a beginner's portfolio, but it carries higher risk than a diversified index fund. Beginners should understand the volatility involved and consider keeping single-stock positions small relative to their overall investments. Starting with index funds first is a common approach recommended by many financial educators.
What is Nvidia's stock ticker symbol?
Nvidia trades on the Nasdaq under the ticker symbol NVDA. You can search for it by that symbol on any major brokerage platform, including commission-free options that offer fractional shares.
Why did Nvidia's stock price rise so much?
Nvidia's stock surged primarily because its GPU chips became the hardware of choice for training large AI models. As spending on AI infrastructure grew rapidly from 2023 onward, Nvidia's revenue and profits expanded dramatically, pulling the stock price higher with them.
Can Nvidia's stock go down significantly from here?
Yes. Nvidia has already experienced a 65% decline once in recent history. High-valuation stocks are sensitive to any growth slowdown, increased competition, or macroeconomic changes. Investors should assume the possibility of large drawdowns and invest only what they can afford to leave invested for years.
