NVIDIA has outperformed the market over the past 20 years by 28.64% on an annualized basis, producing an average annual return of 37.92%. Currently, the company has a market capitalization of $4.85 trillion. The significant growth highlights the impact of compounded returns on long-term investments.

If an investor had bought $100 of NVIDIA stock 20 years ago, it would be worth $60,057.03 today based on a price of $200.09 for NVIDIA at the time of writing. This substantial increase underscores the potential for significant wealth accumulation through consistent market outperformance over extended periods.

NVIDIA’s Performance Metrics

The following table summarizes NVIDIA's key performance indicators over the last two decades:

The key insight from this data is the difference compounded returns can make in cash growth over a period of time. NVIDIA's performance serves as a case study in the power of long-term equity investment.

For much of the artificial intelligence rally, Nvidia Corp. was synonymous with expensive valuations, but that is no longer the case. Despite becoming the world's most valuable company with a market capitalization approaching $4.7 trillion, Nvidia now trades at roughly 30 times trailing earnings. This valuation multiple is well below several of Wall Street’s most popular AI stocks, suggesting investors are no longer paying the biggest premium for AI’s dominant chipmaker. Instead, the market’s richest valuations are being reserved for companies expected to deliver the next wave of AI-driven growth.

Advanced Micro Devices Inc. trades at about 180 times earnings, Palantir Technologies Inc. commands a multiple of around 130, while Arm Holdings Plc carries a trailing price-to-earnings ratio exceeding 400. Nvidia’s valuation stands out not because it is cheap in absolute terms, but because of how it compares with these AI peers. The company’s trailing P/E is only modestly above Alphabet Inc.’s roughly 27 multiple and below Apple Inc.’s approximately 34. It also trades at less than half Broadcom Inc.’s earnings multiple of around 62.

Valuation comparison

The following table illustrates the trailing and forward price-to-earnings ratios for major technology companies involved in the AI sector.

Future earnings expectations

Premium valuations can be justified when earnings growth keeps pace. AMD is expected to grow earnings by roughly 78% next year, while Palantir’s earnings are projected to increase by about 43%. Arm is forecast to deliver nearly 39% EPS growth. Nvidia, meanwhile, is expected to grow earnings by more than 40% over the next year while continuing to post one of the strongest long-term growth records among large-cap technology companies.

Shift in AI investing

The changing valuation landscape reflects a broader shift across AI investing. During the early stages of the AI boom, investors were willing to pay almost any price for exposure to the theme. Today, valuations appear to matter more, with companies increasingly judged on their ability to convert AI demand into sustainable earnings growth. While Nvidia shares have gained only modestly this year after years of exceptional returns, investors have rotated across different parts of the AI ecosystem, rewarding companies tied to memory, semiconductor manufacturing equipment, and infrastructure.