A couple of years ago, investors could talk about nothing but Nvidia (NASDAQ: NVDA). Well, Nvidia and Rolls-Royce.
The US chipmaker became the biggest winner from the artificial intelligence boom, supplying the ‘picks and shovels’ powering the industry. As technology giants raced to build AI models, demand for Nvidia’s processors exploded.
The result has been extraordinary. Annual net income has multiplied over the last five fiscal years:
- 2026: $120.1bn
- 2025: $72.9bn
- 2024: $29.8bn
- 2023: $4.4bn
- 2022: $9.8bn
The Nvidia share price has climbed an astonishing 885% in that time. This would have turned a £9,999 investment into roughly £98,490.
Inevitably, growth has slowed. Over the last 12 months, the shares have risen just 11.5%. That’s the same speed as FTSE 100-listed National Grid. So has Nvidia turned into a boring old utility?
Can this S&P star still outshine the market?
After such a stellar run, the stock had to slow. Nvidia is now a $4.6trn behemoth. It just can’t keep blasting along at the same speed. The price-to-earnings valuation is now 39.7, it isn’t exactly a bargain.
Then we have the question of whether AI is a bubble. Tech hyperscalers are investing hundreds of billions in data centres and AI infrastructure. If those investments fail to generate sufficient returns, demand for Nvidia’s chips could cool sharply. Competition is increasing too, with Google, Amazon and Meta all developing their own custom AI chips to reduce their reliance on Nvidia. China is battling to close the technology gap.
Some investors are also uneasy about Nvidia helping finance purchases by major customers, increasing its exposure if the AI investment cycle slows. Yet there are plenty of reasons to stay optimistic.
Nvidia still enjoys a huge technological lead. Its CUDA software ecosystem has become deeply embedded across the AI industry, making it difficult for customers to switch.
AI is spreading far beyond chatbots. Autonomous vehicles, robotics, healthcare, industrial automation and defence are all expected to become major long-term growth markets for AI chips.
As Amazon and Microsoft showed with their latest results, AI is already generating meaningful revenues rather than simply consuming investment dollars.
So what do the experts think?
The 56 analysts publishing one-year price targets produce a consensus forecast of 314 cents. If correct, that would represent an impressive gain of around 57% from today’s 200 cents, turning £9,999 into approximately £15,698.
The most optimistic target stands at 743 cents, implying a remarkable 272% gain, which would lift £9,999 to about £37,196. The lowest target is 180 cents, suggesting a fall of around 10%.
Of the 64 analysts giving stock ratings in the past three months, the overwhelming majority are positive:
- Strong Buy: 54
- Buy: 7
- Hold: 2
- Sell: 0
- Strong Sell 1
That’s an impressive vote of confidence. I certainly won’t be selling my stake in Nvidia. If anything, I think the recent slowdown makes it worth considering, provided investors keep their expectations realistic. Another 885% gain just isn’t going to happen. But a more modest return? That’s much easier to believe.
Should you invest £5,000 in Nvidia right now?
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Harvey Jones owns shares in Nvidia.
This story originally appeared on Motley Fool
