Nvidia stock had already skyrocketed by 2024, and it was trading at a pricey valuation.
A $500 investment in Nvidia made one year ago still would have done better than an investment in the S&P 500.
A year ago, Nvidia (NASDAQ: NVDA) was battling Apple to be the largest company by market cap. The chipmaker was worth over $3 trillion, and it was expensive, trading at over 50 times trailing sales.
There was an argument that with its huge market cap and high valuation, Nvidia wasn't a winning investment anymore. Let's see how you would've done if you'd invested in it anyway.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Nvidia.
If you'd invested $500 in Nvidia one year ago, you'd now have $674 (as of Nov. 10). Even with how successful the company already was, Nvidia stock has gone up another 35%. It's not the kind of spectacular returns shareholders were getting earlier during the artificial intelligence (AI) boom, but it's nothing to complain about, either.
A $500 investment in the S&P 500, on the other hand, would now be worth $570. The market index has gone up 14% over the last year. However, because the S&P 500 is far more diversified, it's less volatile. Nvidia has outperformed it over the last year, but the company's stock also fell quite a bit more during the stock market sell-off in April.
As Nvidia demonstrates, large-cap stocks and the largest companies in the world can still deliver market-beating returns. While they may not be as exciting as smaller stocks, it's good to have these large, proven companies in your portfolio.
Before you buy stock in Nvidia, consider this:
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Lyle Daly has positions in Nvidia. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool has a disclosure policy.