Is Nvidia a Millionaire-Maker Stock?

Among stocks that made millionaires in the past, few performed better than Nvidia (NASDAQ: NVDA). If a person had invested $1,000 in the stock on its IPO day in January 1999 and never sold, they would own approximately $5 million worth of shares today.

Unfortunately, such gains are unlikely for future Nvidia investors. Unless someone is willing to invest a sum well into the six figures, the semiconductor stock is probably not going to be a millionaire-maker for them, and here's why.

Image source: Nvidia.

Nvidia's growth limitation

Admittedly, the words "Nvidia" and "growth limitations" are not often used in the same sentence. The company reported 85% annual revenue growth in the first quarter of fiscal 2027 (ended April 26) and has delivered comparable results in each quarter for several years.

However, its market cap reveals a critical limitation on growth. It's reached $5 trillion. That makes Nvidia the largest company trading on public markets and is now far beyond just above $500 million right after its IPO.

More importantly, this also means that if one invested $10,000 in Nvidia today, that market cap would have to grow 100 times, to $500 trillion, for that Nvidia investment to reach $1 million.

For one, no company has yet reached a $6 trillion market cap. That fact is less of a concern, as Nvidia could be a $10 trillion company by 2030. Nonetheless, that would merely double an investment of $10,000, bringing it to $20,000. Moreover, reaching $500 trillion seems unlikely, given that the annual output of the entire U.S. economy is currently around $32 trillion.

Furthermore, the stock price's growth could slow. Nvidia's 32 P/E ratio is not far above the 29 average earnings multiple of the S&P 500. Looking forward, the 82% growth rate analysts forecast for fiscal 2027 is also on track to slow to 43% in the next fiscal year. That should put Nvidia stock on track to outperform the overall market.

At the same time, it is unlikely to take a $10,000 investment into the six figures quickly, let alone to $1 million and beyond.

Moving forward with Nvidia stock

Unless an individual can invest a sum well into the six figures in Nvidia, they should not expect to become a millionaire as a result.

Indeed, Nvidia was a millionaire-maker stock, particularly for investors who bought it early in its history. Now, with a $5 trillion market cap, it has reached a level where its size is one-sixth of the entire annual output of the U.S. economy.

Consequently, investors should expect slower price appreciation going forward. Hence, while the low valuation and projected revenue growth leave room for Nvidia to beat the S&P 500's returns, investors should not expect small sums to grow to $1 million.

Will Healy 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.