Did you miss Nvidia’s 2,400% gain? Here’s what needs to be done next.

Nvidia (NVDA 0.94%) shares have risen 2,400% over the past five years, driven not only by optimism about the company’s artificial intelligence (AI) chip business, but also by its bottom line. The company’s earnings rose in triple digits quarter after quarter as AI customers rush to get on the latest chip to power their projects.

This tech giant has been able to maintain its edge — and pricing power — because it offers the most powerful chips around. But lately, even as earnings continue to beat expectations, Nvidia stock has lost steam. Shares fell 18% from early July to early August, and have also stumbled in recent days. In fact, in one trading session this week, Nvidia lost $279 billion in market value — the largest one-day decline by that measure for a US company.

If you haven’t bought shares of this market giant and missed out on previous explosive gains, you may be wondering what your options are now. Is it too late for an Nvidia win or should you buy this player on your feet? Let’s think about what to do next.

Image source: Getty Images.

Why Nvidia Stock Soared

First, let’s talk about why Nvidia has grown so much. The company, initially focusing on graphics processing unit (GPU) sales to the video game market, realized that these powerful chips could be used in many other settings — including the high-growth area of ​​AI. Nvidia put the emphasis there as companies began investing in the technology, which equated to huge gains in revenue — and stellar stock performance.

In that early AI phase, Nvidia was able to generate massive growth: its data center revenue went from low levels to tens of billions of dollars in just a few years. As technology advances, we may not see this level of growth at every stage of development. But overall, there’s reason to be optimistic about Nvidia’s ability to grow revenue significantly over time — and to go through periods of high growth, for example, when major new products are launched.

And one of those times may be right around the corner, with the company’s release of the Blackwell architecture and its most powerful chip yet. Blackwell includes six game-changing technologies that deliver huge advances in computing power, energy savings, networking and security. Although Nvidia’s products are known to be more expensive than those of rivals, the company says the efficiency gains should lead to a lower total cost of ownership over time – meaning customers who spend more now can win in the long run .

Nvidia aims to ramp up Blackwell production in the fourth quarter and even generate billions of dollars in revenue from the platform during that time. Demand for the system is growing, outstripping supply, so I’m bullish on growth not only this year, but well into next year.

Nvidia’s recent decline

Now let’s talk about Nvidia’s recent share price declines. Investors worried about economic growth and the timing of potential interest rate cuts have penalized tech stocks across the board. These companies and their stocks tend to suffer in a difficult economy because it is more difficult for them to expand in this type of environment. For example, investors may be concerned that if interest rates remain high, companies may cut back on technology spending.

But it’s important to consider the long-term picture. There is very likely a lot to be gained by buying Nvidia stock today and holding for the long term. After all, the Blackwell platform should generate significant growth, and “other Blackwells,” as Nvidia CEO Jensen Huang put it, could do the same in the coming years — Nvidia has committed to updating its GPUs hours annually, a key move that should boost demand for the chips.

So while you may have missed out on Nvidia’s first wave of earnings, you could still cash in on the future — and that means buying Nvidia stock is a great move to make right now. Today, you can pick up shares for just 37 times forward earnings estimates, a very reasonable level given Nvidia’s market leadership and constant innovation.

And even if it’s taking longer than expected for the next chapters of Nvidia’s growth story to unfold, that’s okay. When you invest for five to 10 years, you have time on your side.