Key Points
The stock's return has trounced that of the S&P 500 and Nasdaq Composite over the past few years.
As the world's largest company by market capitalization, Nvidia must grapple with high expectations.
Nvidia (NASDAQ: NVDA) has seen revenue and earnings surge from fiscal 2020 through fiscal 2025 (the company's fiscal year ends in January).
During this five-year period, revenue climbed from $10.9 billion to $130.5 billion, and operating income increased by nearly 29 times, from $2.8 billion to $81.5 billion.
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With this kind of growth, the stock has handsomely rewarded investors. Before turning an eye toward the future, how much would you have today if you'd invested $10,000 in shares of Nvidia five years ago?
Image source: Getty Images.
Historical return
Nvidia stock, including dividends, has returned 1,350% over the last five years through Sept. 18. That performance trounced the approximately 115% total return of both the S&P 500 and Nasdaq Composite indexes.
That means your initial $10,000 investment in Nvidia would have grown to over $145,000. That same amount invested passively in the S&P 500 or Nasdaq Composite would have grown to only about $21,500.
While that rally no doubt represents one of the greatest performances in stock market history, it's natural to wonder what lies ahead when Nvidia is already a $4.3 trillion company.
Growth expectations
Nvidia's recent results show the company still has plenty of growth left in the tank. Fiscal 2026 second-quarter revenue increased 56% year over year to $46.7 billion. This helped drive earnings per share 61% higher to $1.08.
Given the company's track record, investors expect this type of growth to continue, as reflected by the stock's price-to-earnings (P/E) ratio. Nvidia trades at a P/E multiple of 50, nearly double the S&P 500's P/E of 26.
Once you get over the sticker shock, however, it's important to remember Nvidia has reached its position by supplying essential chips and software to the rapidly growing artificial intelligence space. With AI-related spending expected to rise to trillions of dollars per year by the end of this decade, it's tough to bet against the stock.
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Lawrence Rothman 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.