Is Nvidia Still a Millionaire-Maker Stock?

Investing in Nvidia (NASDAQ: NVDA) has already produced many millionaires. The leading AI chipmaker's shares have surged by more than 10,000% over the past decade. For investors who held on to their shares throughout that remarkable and sometimes volatile run, a position worth $10,000 at the start would have grown into one worth well over $1 million today.

However, investors shouldn't bet on Nvidia repeating that 100x performance, or anything close to it.

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Its market cap is enormous

Nvidia now carries a $5 trillion market cap, and there's only so much capital to go around. A 10x return from here would result in a $50 trillion market cap. That's a larger figure than the U.S. national debt, and would be equivalent to about two-thirds of the current total value of the U.S. stock market.

This doesn't mean that Nvidia is an overvalued stock. In fact, far from it. Nvidia trades at a 13 forward P/E ratio, and revenue more than doubled year over year in its fiscal 2027 second quarter. The company also returned $26 billion to shareholders in that quarter through stock buybacks and dividends, but the majority of that capital went toward buybacks.

Nvidia is still the undisputed leader in AI processors. Its graphics processing units (GPUs) and other advanced chips are still integral for an industry that seems to be growing parabolically. However, its massive market cap will be a major obstacle to it producing another 10x return. It's easier to get millionaire-maker returns with small-cap and mid-cap stocks because there's simply more macroeconomic space for them to expand into. Even large-cap stocks with valuations below $100 billion offer much better shots at multibagger returns than a multitrillion-dollar mega-cap, as long as they are growing and improving their fundamentals.

Nvidia can still outpace the stock market

Finding a stock that could conceivably turn a $10,000 investment into a $1 million stake is extremely hard to do in any market, but if that's the type of potential you're looking for, Nvidia isn't the right pick. However, investors with larger portfolios who want to diversify their holdings on the path to a seven-figure net worth may want to consider the chipmaker.

On a forward price-to-earnings basis, its valuation is lower than average for the S&P 500, and Nvidia's growth rates outpace almost every stock in the index. That setup can help Nvidia's returns exceed what index fund investors receive.

Nvidia has a long history of beating the stock market. As AI demand continues to heat up, more companies will turn to it for advanced chips. The artificial intelligence industry is projected to maintain a 30.6% compound annual growth rate through 2033. Furthermore, the rollouts of humanoid robots and self-driving cars are still in their early stages. Bringing those innovations to market at scale will require vast amounts of Nvidia chips.

Whether or not Nvidia is an appropriate addition to your portfolio will depend on what you expect from the stock. If you're looking for the next potential moonshot, those days are over for Nvidia. It's not going to generate another 10,000% return over the next decade. However, it's still a valuable AI stock that can outperform the stock market and reward long-term shareholders.

Marc Guberti 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.