If You Invested $10,000 In Nvidia The Day ChatGPT Released, Here’s How Much You’d Have Today

By | March 19, 2024

November 30, 2022 could go down as one of the most important days in technological history.

That was the day OpenAI launched ChatGPT, the generative artificial intelligence (AI) chatbot that has dazzled everyone, including top CEOs and investors. ChatGPT became the fastest growing consumer app in history, reaching 100 million monthly active users just two months after launch. The new app has made it clear that we are in a new era of technology: the age of AI.

This is no secret for investors Nvidia (NASDAQ: NVDA) has been one of the biggest winners of the generative AI boom. The company’s graphics processing units (GPUs) and other chips have experienced skyrocketing demand, as these products are particularly well suited to running demanding applications like ChatGPT, and the success of ChatGPT itself has demonstrated the power of Nvidia’s GPUs.

Buying Nvidia stock when ChatGPT first launched would have been a genius move, but before I answer the question of how much the stock has returned since then, let’s take a look at why Nvidia has been such a big winner in AI tree.

A phone with the ChatGPT logo in front of it A phone with the ChatGPT logo in front of it

Image source: Getty Images.

Why Nvidia is leading the AI ​​boom

Nvidia invented GPUs in 1999, and the company has been a leader in that category ever since. GPUs are great for gaming, one of Nvidia’s historic strengths, and those chips also excel in applications like cryptocurrency mining and autonomous driving. Now it’s artificial intelligence’s turn.

Compared to central processing units (CPUs), GPUs perform engineering calculations faster and more efficiently, meaning they deliver better performance for AI training and inference, as well as other applications that use accelerated computing – a faster way to process workloads and what Nvidia does CEO Jensen Huang describes this as the future of data center infrastructure.

As a result, AI models have been trained on GPUs and GPU technology has improved exponentially since its early years. According to Stanford’s Human-Centered AI group, GPU performance has increased “about 7,000 times” since 2003 and the chips should keep getting better. GPUs are also more cost-effective than alternatives such as CPUs.

Based on the MLPerf, an industry-standard benchmark for AI, Nvidia’s GPUs have been the best at training and inference since the test launched in 2019, which helps explain why Nvidia has a virtual monopoly in this category.

Advanced micro devices is the only other major GPU maker, but Nvidia still dominates the market with an estimated 98% share of the data center GPU category. While the competition is coming, including AMD’s new Mi300 and Intel‘s Gaudi3 accelerator, both of which were recently launched, it won’t be easy to dethrone Nvidia’s dominance in AI GPUs. That explains why the company is now worth more than $2 trillion, and its stock is still testing record highs more than a year after ChatGPT’s launch.

Nvidia’s post-ChatGPT wave

When ChatGPT launched on November 30, 2022, Nvidia shares actually soared, rising 8.2% to close at $169.15 that day. That gain was a sign that the market was recognizing that the new generative AI app could be a boon for the GPU superstar.

If you had bought Nvidia on that day, you would have been up 428% as of March 12th. That means the $10,000 invested in Nvidia on the day ChatGPT came out would have become $52,800. That jump compares to a gain of just 26.2% for the S&P500 index in the same period, or almost 41% for the Nasdaq Composite.

NVDA graphNVDA graph

NVDA graph

As you can see in the chart above, Nvidia stock actually fell to close out 2022, in line with the market, but then recovered as the AI ​​boom began in earnest in early 2023. The stock rose in May after blowing away Wall Street. with guidelines calling for a tripling of sales. This year, Nvidia has risen again on signals that Wall Street continues to underestimate demand for AI and that Nvidia is entering new markets such as PC chips.

Is it still safe to buy Nvidia?

What’s also notable about the stock’s surge following ChatGPT’s launch is that its valuation has actually shrunk in that time, as measured by its price-to-earnings (P/E) ratio, as earnings have been up shot because it took advantage of the demand for AI.

NVDA PE ratio chart (forward).NVDA PE ratio chart (forward).

NVDA PE ratio chart (forward).

That’s a sign that buying Nvidia isn’t as risky as it seems, after a run-up that added more than $1.5 trillion in market value in less than 16 months, making it the third most valuable company in the world. Microsoft And Apple.

Investors should expect Nvidia stock to remain volatile, like the rest of the AI ​​sector, but concerns about a possible bubble appear to be overblown. While the competition is coming, Nvidia is dominating the AI ​​GPU space for a reason, and it should remain the leader as it continues to innovate at a rapid pace.

Should You Invest $1,000 in Nvidia Now?

Consider the following before buying shares in Nvidia:

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices, Apple, Microsoft and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft , and briefly May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

If you invested $10,000 in Nvidia the day ChatGPT came out, this is how much you would have today. originally published by The Motley Fool

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