Think It's Too Late to Buy Nvidia? Here's the Biggest Reason Why There's Still Time.

Key Points

• Nvidia's stock has increased by more than 16 times the S&P 500's gains since the start of 2023.

• The company holds a commanding market share in the data center GPU market.

• Some estimates suggest the global data center GPU market could have a compound annual growth rate of around 35% through 2023.

• 10 stocks we like better than Nvidia ›

With the artificial intelligence (AI) boom in full force, it's safe to say that no company has benefited more than Nvidia (NASDAQ: NVDA). Since the start of 2023, the stock is up over 1,100% -- over 16 times the S&P 500's (SNPINDEX: ^GSPC) gains in that span.

When a stock experiences generational gains like that in such a short period, it's natural for investors to wonder if they missed the train. In Nvidia's case, I wouldn't expect 1,100% gains over the next three years, but the company is still positioned to be a great growth opportunity for investors. And it all comes to the expected growth of data centers.

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At the heart of data centers are graphics processing units (GPUs), of which Nvidia is the main supplier. It commands around a 92% market share in the data center GPU market. In its fiscal year first quarter (ended April 27), Nvidia's data center revenue increased 73% year over year to $39.1 billion.

The core of Nvidia's cash machine

As AI adoption grows, so will the importance of data centers, because they power AI workloads (training, deploying, and scaling). The global data center GPU market is estimated to have a compound annual growth rate (CAGR) of around 35% from 2025 to 2033, according to Grand View Research.

Image source: Nvidia.

Other competitors will likely make up ground on Nvidia in the industry, but its stronghold means that it stands to gain significantly from this growth. Financial growth doesn't always equate to stock price growth, but Nvidia investors have shown that they put a lot of emphasis on the company's data center revenue and business growth.

Should you invest $1,000 in Nvidia right now?

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Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.