Finding The Next Nvidia
10 potential stocks that might become the next Nvidia.
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Nvidia's journey to becoming a leading force in the computing industry is a fascinating one. To find the next Nvidia, we will first explore the most important indicator that shows early sign on Nvidia’s success. And at the end of this article, we shortlist 10 stocks that are currently showing the same characters.
The Start of Nvidia
Nvidia was founded in 1993 with the goal of creating 3D graphics cards for gaming and multimedia markets, it was not until the late 1990s that it truly began to reshape the industry. In 1999, Nvidia announced the revolutionary GPU, the graphics processing unit, which ushered in a new era of computing.
Recognizing the potential of this technology, Nvidia took a page from Steve Jobs' playbook and focused on building an ecosystem around its products. This strategy led to the development and launch of the CUDA Toolkit in 2006, which unlocked the parallel processing capabilities of GPUs and paved the way for the breakthrough AlexNet neural network in 2012.
Nvidia's commitment to innovation continued with the introduction of the RTX platform in 2018, which was the first GPU capable of real-time ray tracing, a groundbreaking graphics rendering technique that simulates the physical behavior of light.
The seeds of Nvidia's success were sown through its intensive R&D spending, which often exceeded 25% of its revenue in the years leading up to fiscal year 2017. This significant investment in research and development, despite its impact on the company's short-term return on invested capital (ROIC), laid the foundation for Nvidia's long-term dominance.
The Tipping Point and Nvidia's Unprecedented Growth
Nvidia's foresight and strategic positioning allowed it to capitalize on the major shifts in the computing industry towards parallelization and advancements in machine learning. The fiscal year 2017 marked a turning point, as Nvidia's revenue soared, driven by the explosive growth of the Bitcoin mining industry and the rapid advancements in the AI and machine learning community.
The COVID-19 pandemic further accelerated Nvidia's trajectory, as the demand for its GPUs skyrocketed due to the surge in cryptocurrency mining and the influx of new investors seeking a hedge against inflation. This perfect storm of events propelled Nvidia's revenue from $16.7 billion in fiscal year 2021 to an astounding $60.8 billion in fiscal year 2024.
The recent launch of ChatGPT by OpenAI in late 2022 further solidified Nvidia's position, as the technology sector recognized the immense potential of large language models (LLMs) and significantly increased investments in this rapidly evolving field. Nvidia's revenue is projected to reach $113.8 billion in fiscal year 2025 and $143.2 billion in fiscal year 2026, a testament to the company's remarkable growth and dominance.
The Secret to Nvidia's Success
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