Nvidia (NASDAQ: NVDA) has been one of the hottest stocks on the market in the last 12 months. In that time, it’s up a remarkable 216.3%. This year alone it’s jumped 45.8%. January saw a whopping £232bn added to its market cap.
I purchased shares in the technology company last year. Right now, I’m sitting on a 66.5% gain. Safe to say, it’s been the best performer in my portfolio.
But what should I do now? I’m cautious that a near 70% rise is mighty impressive. I don’t want to be greedy, so maybe I should take some profit. On the other hand, could Nvidia just keep rising?
A bright future
If it does keep surging, I don’t want to miss out. And there’s a good case to be made that it will. After all, its sales are forecast to keep growing at an impressive rate.
For FY24, which ended on 31 January, it’s predicted that Nvidia’s sales will rise 119% year on year to just shy of $60bn. For FY25, sales growth is forecast to slow. That said, sales are still expected to rise an impressive 57% to $92.9bn.
A dominant player
The reason for such bullish forecasts is Nvidia’s dominance in the market. It’s been labelled as a leader of the artificial intelligence (AI) revolution. So far, it’s been living up to this description.
The business is best known for manufacturing graphics processing units (GPUs). These are used in a host of industries including video gaming and cloud computing. It’s predicted that Nvidia has between a 90% and 95% share of the market. Its GPUs were used in the development of ChatGPT. Meta also has a large inventory of Nvidia GPUs and has plans to add more this year.
My concerns
With all that, it’s no surprise Nvidia has soared. But as impressive as that is, I do have a few concerns.
First, there’s always the risk that the stock comes crashing down. Investor hype has pushed it up in the short term. But that’s not what I’m here for. I buy to hold. There’s always the potential that as quickly as it has risen, it falls.
There’s also competition. The AI industry is fast evolving. Just as Nvidia has burst onto the scene, so could one of its competitors. Advanced Micro Devices with its rival GPUs is an example of this.
Am I missing out?
But if I don’t buy more Nvidia shares today at $702, would I be missing out on potential future gains? I think so.
The stock has been on a tear in the last year. Usually, this would concern me. However, there’s plenty that excites me about Nvidia. I think the business can continue to go from strength to strength in the years to come.
Given the exposure I already have, I’ll be holding off from adding to my position. But if I didn’t own the stock, I’d strongly consider buying. Its next results are due on 21 February. I’ll be watching closely to see how the market reacts.
