Nvidia (NVDA -2.68%) launched 30 years ago with a simple vision. Its founders wanted the gaming and multimedia markets to experience the power of 3D graphics. A few years later, the company revolutionized the computer industry by inventing the first graphics processing unit (GPU).
Nvidia has had a long history of innovation since developing the GPU. Today, the semiconductor company develops and manufactures processors vital for data centers, cloud-based platforms, gaming, automobiles, and artificial intelligence (AI).
The company's latest innovation is accelerated computing. Nvidia pioneered the technology, which uses specialized hardware to significantly speed up work. It will often use parallel processing to bundle recurring tasks.Semiconductor
The company believes accelerated computing can help unlock the power of AI. Nvidia's GPUs power the AI software behind OpenAI's wildly popular ChatGPT program. Fellow tech behemoth Microsoft (MSFT -1.43%) is investing billions of dollars into OpenAI to help take the technology to the next level, which should drive strong demand for Nvidia's processors. AI only accounted for a tiny sliver of Nvidia's revenue in early 2023. However, the company expects its revenue from AI to be a much larger percentage over the next year.
Accelerated computing could also help re-accelerate Nvidia's profits in the future, boosting the company's stock price and making it an excellent long-term investment.Here's a step-by-step guide on buying Nvidia shares and some factors to consider before investing in the technology stock.
How to buy Nvidia stock
How to buy Nvidia stock
You can buy shares of Nvidia in any brokerage account. If you still need to open one, these are some of the best-rated brokers and trading platforms. Here's a step-by-step guide to buying Nvidia stock using the five-star-rated platform Fidelity.
Fidelity makes it easy to buy stocks. Its website offers a . Here's a screenshot of how to place a stock trade with Fidelity:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The ticker symbol (NVDA for Nvidia).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.
Should I invest in Nvidia?
Should I invest in Nvidia?
Before investing in Nvidia, you must determine whether Nvidia stock is a good one to buy. Here are some reasons why you might want to consider investing in Nvidia stock:- You want to invest in a company capitalizing on the long-term demand growth for computing power.
- You want to invest in a profitable and financially strong company.
- You use Nvidia's technology in gaming applications.
- You like the company's investments to provide solutions for exciting growth sectors like AI and autonomous vehicles.
- You believe Nvidia stock can outperform the S&P 500 over the long term.
- You think the company's accelerated computing strategy will drive profit growth in the coming years.
- You're confident the gaming market will bounce back from its post-pandemic lull.
- You believe Nvidia can continue to be an innovator.
- You don't rely on dividend income right now and are content with the company's small payment.
- You understand that Nvidia's stock could be volatile and might lose value.
- You want to invest in a founder-led company and believe that co-founder and CEO Jensen Huang can continue growing shareholder value.
- You're worried about the slowdown in tech-related spending and its effect on Nvidia's data center products.
- You don't understand what the company does or how it makes money.
- You're not sure the gaming market will recover.
- You're concerned about AI and unsure if it will live up to the hype.
- You're looking for investments with lower volatility than Nvidia stock.
- You're seeking more dividend income than Nvidia currently provides.
Is Nvidia profitable?
Is Nvidia profitable?
Profit growth helps drive stock price appreciation over the longer term, making Nvidia an ideal area for beginning investors to focus on before buying shares of any company.Nvidia is solidly profitable. The company generated almost $27 billion of revenue and produced $4.4 billion of net income in its 2023 fiscal year. While revenue was flat from the previous year, income decreased sharply (55%) from its 2022 fiscal year. Weighing on income were higher costs -- including increased spending on research and development -- and lower sales of higher margin products to the gaming and cryptocurrency mining markets.
However, Nvidia has delivered significant profit growth over the long term, helping drive its share price higher:Revenue
Nvidia also generates lots of cash. The company produced $5.6 billion of cash from operations in its 2023 fiscal year and almost $3.8 billion of free cash flow. This cash flow gave it the funds to invest in continued innovation while returning money to shareholders through dividends and share repurchases.
Nvidia believes its investments in accelerated computing position it to capitalize on the explosive growth in AI. The company also expects the gaming market to recover from its post-pandemic slump. These catalysts could enable Nvidia's profits to re-accelerate in the future.Does Nvidia pay a dividend?
Does Nvidia pay a dividend?
Nvidia initiated a dividend in 2012. It had steadily increased its payout for the first several years after declaring its initial dividend.
However, as of early 2023, Nvidia hadn't increased its dividend in several years (and didn't plan to increase its payout in the coming year). With the dividend remaining static and the share price continuing to gain value, Nvidia's dividend yield has fallen over the years. It was very low in mid-2023 (0.04% compared to 1.5% for the S&P 500).
Although Nvidia doesn't pay a big dividend, it returns significant cash to investors through share repurchases. The company returned $10.4 billion to investors in its 2023 fiscal year, paying $398 million in dividends and repurchasing more than $10 billion in stock. While cash returns in its 2023 fiscal year outpaced free cash flow, Nvidia maintained a strong balance. It entered its 2024 fiscal year with $13.3 billion of cash against less than $11 billion in debt.
ETFs with exposure to Nvidia
ETFs with exposure to Nvidia
Instead of actively buying shares of Nvidia directly, you can passively invest in the technology company through a fund holding its shares.
Nvidia is one of the largest companies in the world by market capitalization and is a widely held stock. Nvidia is in several stock market indexes, including the S&P 500 and Nasdaq Composite Index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Nvidia stock.
According to ETF.com, 439 ETFs held 222.3 million shares of Nvidia as of mid-2023. The ETFs with the most shares were:| Exchange-traded Fund | Assets under management | Nvidia shares held | Fund Weighting | Position ranking |
| Invesco QQQ Trust (NYSEMKT:QQQ) | $204.0 billion | 33.6 million | 7.1% | 3rd largest |
| SPDR S&P 500 ETF Trust (NYSEMKT:SPY) | $421.2 billion | 28.1 million | 2.9% | 4th largest |
| iShares Core S&P 500 (NYSEMKT:IVV) | $336.8 billion | 22.4 million | 2.9% | 4th largest |
| Vanguard S&P 500 ETF (NYSEMKT:VOO) | $325.9 billion | 20.9 million | 2.7% | 4th largest |
| Vanguard Total Stock Market ETF (NYSEMKT:VTI) | $310.7 billion | 16.6 million | 2.2% | 4th largest |
Given its large market cap, Nvidia is among the top five holdings of the five largest ETFs by assets under management (AUM). The Invesco QQQ Trust owns the most shares and has the highest portfolio weighting among the biggest ETFs. That makes it a solid option for investors seeking some exposure to Nvidia stock.
Several other ETFs offer greater exposure to Nvidia stock. The VanEck Semiconductor ETF (SMH -1.46%) is a reasonably large ETF with a higher portfolio weighting to Nvidia at 19.5%. That makes it a possible alternative for those seeking passive exposure to the stock.
Will Nvidia stock split?
Will Nvidia stock split?
As of early 2023, Nvidia hadn't announced an upcoming stock split. However, the company has completed several stock splits throughout its history:
| Split date | Stock split |
| July 2021 | 4-for-1 |
| September 2007 | 3-for-2 |
| April 2006 | 2-for-1 |
| September 2001 | 2-for-1 |
| June 2000 | 2-for-1 |
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