U.S. tech company Nvidia released quarterly earnings this week and despite low Wall Street expectations for the chipmaker, its performance did not disappoint.
If you invested in Nvidia (NVDA) 10 years ago ago, you would end up with a healthy profit. A $1,000 investment in 2009 would be worth almost $13,000 as of Aug. 16, 2019, for a total return of nearly 1,200%, according to CNBC calculations. By comparison, a $1,000 investment in the S&P 500 would have earned a total return of around 250% over the same period.
Since launching in 1993, the tech company which specializes in manufacturing high-end graphics processors, has become a huge player within the gaming and artificial intelligence (AI) industries. Nvidia is in the middle of getting back to normal after channel-inventory issues emerged last year, and now, ahead of the back-to-school season, the company's chief financial officer, Colette Kress, told analysts on its earnings call Thursday to expect Nvidia's key gaming business "to grow to reach that full normalization" by the end of the current quarter.
For its fiscal second quarter, Nvidia reported earnings of $1.24 per share, versus $1.15 expected by analysts. Revenue landed at $2.58 billion, versus the predicted $2.54. Gaming, the company's biggest segment, posted revenue of $1.31 billion, down 27% from a year earlier but just above estimates of $1.30 billion.
CNBC: Nvidia stock as of August 16, 2019.
Looking forward, the future of Nvidia could go either way, especially given how quickly technology progresses. On Thursday, Nvidia CEO Jensen Huang told CNBC that he's not currently worried about companies like Google, Amazon, Facebook or Tesla becoming competitors, especially since those firms are Nvidia customers and Google is the only one he knows of that produces its own silicon at scale.
However, while Nvidia still dominates the data center market, experts say its competitors, such as AMD, do pose a threat. Jon Peddie, of Jon Peddie Research, told CNBC in an email that he thinks AMD "has won some great engagements and will be increasing its share" in the market by the end of 2020.
That said, there is hope that Nvidia's growth will continue given its long-term plans of integrating its AI technology into self-driving cars.
In June, the company's stock surged after it announced a partnership with Volvo. Nvidia also has partnerships with other major automakers, such as Toyata and Audi.
If you are thinking about getting into investing, experts often advise starting with index funds, which hold every stock in an index, such as the S&P 500. Seasoned investor Warren Buffett agrees that it's a smart idea to start with index funds, in part because they fluctuate with the market, making them less risky than individually selected stocks.
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