Nvidia‘s share price has skyrocketed over 1500% in the last 5 years. As one of the top performing large-cap stocks, many investors are taking notice and considering adding exposure.
With category leadership in graphics processing units (GPUs) powering video gaming and exponential growth opportunities in artificial intelligence (AI), autonomous vehicles, and metaverse computing, there is a compelling bull case that Nvidia still has substantial room left to run.
In this detailed guide, you‘ll learn:
- Multiple methods for investing in Nvidia
- NVDA stock pricing, valuation metrics, and growth outlook
- Competitive positioning and business model strengths
- Options for gaining exposure including funds and cryptocurrencies
- Key factors that drive Nvidia‘s stock price
Let‘s dive in and breakdown exactly how you can invest in this innovative semiconductor and software powerhouse!
Overview of Nvidia‘s Business and Products
Nvidia first made a name for itself by providing industry-leading GPUs that enabled immersive video game experiences by processing stunning graphics in real-time.
The company has since greatly expanded both upmarket and into additional product segments:
| Business Segment | % of Revenue | Key Products |
|---|---|---|
| Gaming | 44% | GeForce and RTX graphics cards |
| Data Center | 48% | GPUs for AI, HPC, cloud computing |
| Professional Visualization | 5% | Quadro GPUs |
| Automotive and Robotics | 5% | DRIVE platforms |
Within gaming, Nvidia retains over 80% discrete desktop GPU market share.
The fast growing data center segment now fuels nearly half of sales by powering AI applications and high performance workloads for major cloud providers like AWS and Microsoft Azure.
Growth and Innovation Driving Investor Enthusiasm
Nvidia stock‘s meteoric rise stems from the company leveraging its graphics and parallel processing expertise across high potential categories.
Financial Performance Snapshot
| Metric | 2018 | 2022 | 5-Year CAGR |
|---|---|---|---|
| Revenue | $9.7 billion | $31 billion | 33% |
| Net Income | $4.1 billion | $9.8 billion | 24% |
| Gaming Sales | $5.5 billion | $13.8 billion | 26% |
| Data Center Sales | $2.9 billion | $15 billion | 54% |
With gaming boasting over 1 billion PC and console gamers globally, Nvidia enjoys a stable source of revenue even amidst economic slowdowns.
The bigger growth narrative lies in surging demand for accelerated computing. Nvidia‘s GPUs excel at parallel processing tasks involving AI, simulations, predictive analytics and more.
Top use cases such as natural language processing (NLP) and computer vision are still early in enterprise adoption lifecycles – suggesting strong tailwinds over the coming decade.
Nvidia allocates over $3 billion annually to R&D, pioneering advances in silicon fabrication, software platforms, and reference designs that support next generation applications.
The company‘s recent launches of Quantum-2 networking fabric and NeMo AI model framework underscore Nvidia‘s commitment to pushing boundaries.
Based on the total addressable market across gaming, data center, AI, 5G, robotics and other target verticals, Nvidia does not lack for growth runway.
Executing on these massive opportunities does face threats however – primarily from rivals AMD, Intel, and various AI chip startups aiming to challenge Nvidia‘s incumbency.
Maintaining GPU leadership across both consumer and enterprise domains remains an ongoing priority. Nvidia ranks as one of the most innovative public companies based on patent volume and hardware achievements, speaking to its strengths on this front.
Now that we‘ve covered Nvidia‘s business profile and factors fueling investor enthusiasm, let‘s examine how you can actually invest in this growth stock.
How to Buy Nvidia (NVDA) Stock
The most direct way to invest in Nvidia is purchasing shares of its common stock, which trades on the NASDAQ under ticker symbol NVDA:
We‘ll breakdown the process to buy NVDA stock through an online brokerage account:
- Choose an online brokerage – Leading choices include Fidelity, TD Ameritrade, E*Trade, Vanguard, and Charles Schwab. Compare commission fees, platform features, mobile apps, research capabilities, account minimums and other variables to select your provider.
- Open a brokerage account – You‘ll fill out personal details including contact info, income, investing experience and more. Approval is generally instant.
- Fund your account – Connect your checking account to transfer money in or arrange a wire transfer. Leading brokers offer various convenient funding options.
- Search ticker NVDA and enter order details – Market buy orders will purchase NVDA shares at the current asking price. Limit buy orders let you set a target price. Choose quantity of shares as well.
- Monitor your investment and NVDA‘s performance – Your broker‘s apps and portal will facilitate tracking Nvidia‘s latest stock price, valuation, financial reports, news events and more.
I recommend Fidelity as a top brokerage choice based on $0 trades, robust research offerings, account management capabilities, and overall ease of use.
Now that you know how to invest in Nvidia stock directly, let‘s examine other alternatives for investors less comfortable buying individual companies.
Investing in Nvidia Through Mutual Funds and ETFs
Exchange-traded Funds (ETFs) and mutual funds provide convenient vehicles for investing in a group of stocks matching a certain index or theme.
Rather than trying to pick winners, funds provide instant diversification. Many ETFs and mutual funds dedicated to sectors like technology or AI innovation include Nvidia as a top holding.
Allocating a portion of your investments to funds with Nvidia exposure allows participating in upside price movements while reducing overall volatility compared to owning just NVDA shares.
Here are some popular examples with meaningful Nvidia allocations as of November 2022:
- ARK Innovation ETF (ARKK) – 8.1% NVDA
- Fidelity Select Software and IT Services Portfolio (FSCSX) – 5.2% NVDA
- Morgan Stanley Institutional Technology Portfolio (MTEC) – 5.1% NVDA
Evaluate each prospective fund‘s objectives, total assets under management, past performance metrics, expenses, and complete holdings before investing to ensure fit.
I personally utilize ARKK in my portfolio to overweight tech innovators like Nvidia poised to shape the future global digital economy.
Additional Ways to Invest in Nvidia
Beyond direct stock ownership and fund investments, investors can gain upside exposure to Nvidia through options contracts and cryptocurrencies as well.
Nvidia Options Trading
Buying call or put option contracts allows speculating on NVDA stock price movements without needing the full capital to purchase shares outright.
Options can provide leveraged performance during extreme volatility. Just understand the inherent risks with options expire worthless if Nvidia stock fails to breach your defined price threshold during the contract duration period.
Cryptocurrency Mining
Cryptocurrencies like Ethereum and others rely on power-hungry GPUs for verifying transactions and mining new coin supply. ETH‘s upcoming transition to proof-of-stake consensus will reduce this effect, but the linkage remains.
Investing in the crypto ecosystem – whether Bitcoin or altcoins – offers indirect exposure to Nvidia‘s foundational role as the graphics chipmaker powering a significant portion of mining networks.
Purchasing Nvidia Products
Spending money on Nvidia products including GeForce graphics cards ultimately fuels demand for the underlying components from the company itself.
Adoption of offerings like NVIDIA Studio laptops for creators and Omniverse development platforms provides helpful indicators on business momentum.
That said, buying Nvidia‘s gaming and enterprise solutions should be considered consumption rather than "investing" which typically refers to acquiring financial assets like NVDA stock or funds.
Key Factors Influencing Nvidia‘s Share Price
As an Nvidia investor or prospective buyer, monitoring elements that impact the company‘s operational performance and market value is critical for maximizing returns.
Key variables to watch closely include:
- Financial Results: Quarterly earnings releases, revenue growth rates, margins, cash flow position, and forward guidance outlook directly swing NVDA stock higher or lower.
- Product Innovation: New GPU architecture launches, expanded software ecosystem, and next generation chip R&D developments maintain Nvidia‘s leadership position.
- Competition: Market share shifts related to rivals like AMD and Intel, as well as AI accelerator startups aiming to disrupt Nvidia.
- End Market Trends: Demand signals from gaming, data centers, cloud computing, 5G rollout supporting Nvidia‘s target verticals.
- Analyst Sentiment: Wall Street research reports and price target adjustments also influence stock direction.
Digesting Nvidia‘s quarterly investor presentations, tracking partnership announcements, and following tech news related to the above factors helps better predict NVDA price fluctuations.
Technical analysis examining prior price action and trading volumes using charts and indicators also assists with timing buy and sell decisions.
Final Thoughts on Investing in Nvidia
I hope this guide has broken down multiple avenues for investing in Nvidia – arguably one of the most important and innovative companies today.
Owning NVDA stock offers direct participation in Nvidia‘s future successes as AI, high performance computing, robotics, and metaverse experiences transform industries and daily life over the coming years.
If you decide to invest, closely track the company‘s execution crossing new verticals and advancing GPU capabilities to new heights through enormous R&D investments.
Wall Street remains highly bullish on Nvidia‘s prospects based on revenue growth forecasts near 30% annually over the next 3 years.
Now is certainly not a bad time to consider building an initial position!
Let me know in the comments if you have any other questions on investing in NVDA or semiconductor stocks broadly.