Nvidia started as a tech specialist focused on gaming GPUs, but its strength in the category gave way to huge growth opportunities.
Nvidia's leadership in advanced GPUs gave it a big lead in AI processing.
The company's wins in AI have translated into incredible gains for shareholders over the last five years.
Nvida (NASDAQ: NVDA) has gone through an incredible transformation over the last five years. In 2020, revenue from the company's data center segment began eclipsing revenue from its gaming segment for the first time. Strikingly, the core architecture of its graphics-processing units for both gaming and data centers wasn't wildly different.
It just so happened that the GPU technologies it had developed for gaming could be adjusted and made more powerful in order to carry out complex computations for distributed computing run through data centers. The company's expertise in high-end GPUs also gave it perfect positioning to dominate the artificial intelligence (AI) hardware revolution and deliver incredible returns for shareholders.
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Image source: Nvidia.
Over the past five years, Nvidia stock has delivered a dividend-adjusted total return of roughly 1,490%. With that level of return, investors who took a buy-and-hold approach to the stock on this day five years ago with a $1,000 investment would now own a position worth more than $15,900. j
Nvidia recently became the first company to reach a $5 trillion market capitalization, and it could wind up holding on to its position as the world's most valuable business for the foreseeable future. The key to the company's incredible valuation gains has been its leadership in the advanced AI processor space, and there's little indication that it will be losing this advantage anytime soon.
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Keith Noonan 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.