Nvidia (NASDAQ: NVDA) has delivered one of the strongest runs in modern market history. Over the last five years, the stock has returned roughly 950%, far ahead of the S&P 500’s 74% gain. That kind of performance made Nvidia the textbook millionaire-maker stock for an earlier stage of its growth cycle.
Today, the story is more nuanced. Nvidia remains central to the generative AI boom, but its massive scale is beginning to change how investors value the opportunity. The company is still executing well, yet the market is increasingly asking a different question: can a business this large keep compounding at a pace that creates another era of outsized gains?
AI demand still supports the core bull case
The generative AI megatrend is not fading. If anything, the capital spending cycle may be accelerating. Analysts at Evercore and Bank of America expect big tech’s AI-related capital spending to exceed $1 trillion in 2027, up from around $800 billion to $900 billion this year. Much of that investment is flowing into advanced hardware for massive data centers, where Nvidia’s GPUs remain a critical layer of the AI infrastructure stack.
Nvidia’s first-quarter numbers reinforce that point. Revenue jumped 85% year over year to $81.6 billion. For a company already this large, that growth rate is exceptional. The data center segment continues to drive the business, and Nvidia’s newer product roadmap, including the Vera Rubin Platform, is aimed at removing processing bottlenecks tied to the rise of agentic AI.
Agentic AI is widely viewed as the next phase of the industry. Unlike earlier AI systems, it is designed to independently plan and make decisions with limited human oversight. That makes it especially relevant for automation across industries, and it helps explain why demand for high-performance chips remains strong.
Profitability and capital returns are strengthening
Nvidia’s investment case is no longer only about revenue growth. The company also benefits from pricing power and operating leverage. Net income soared 211% year over year to $58.3 billion, showing that Nvidia’s scale translates into substantial earnings power.
Management is now leaning harder into shareholder returns. As of May, Nvidia increased its cash dividend from just $0.01 per share to $0.25 per share, a yield of around 0.5%. It also authorized an additional $80 billion in stock repurchases, on top of the $38.5 billion remaining from its prior program.
Buybacks matter because they reduce shares outstanding. That increases each remaining shareholder’s claim on future earnings and cash flow. In many cases, repurchases also support long-term stock performance. Unlike dividends, buybacks are not taxed as regular income, which can improve after-tax returns over time.
Nvidia’s buyback-heavy approach stands apart from peers such as Amazon, Microsoft, and Micron Technology. Those companies are directing more cash toward AI-related capital expenditures, including data centers and expanded production capacity. Nvidia’s model is arguably lower risk because it relies on internally generated cash rather than debt or dilution.
Why the millionaire-maker label no longer fits
Even with its strong fundamentals, Nvidia is no longer the kind of stock that can plausibly repeat earlier multibagger-style gains from the same base. With a market cap of $4.72 trillion, the company is simply too large for the kind of explosive upside that smaller innovators can still deliver.
That does not make the stock unattractive. It means the return profile has changed. Nvidia’s sky-high margins are likely to moderate over time as customers develop in-house alternatives and competitors narrow the technology gap. Those pressures are normal for any dominant platform at this stage of maturity.
Still, valuation matters. Nvidia’s forward price-to-earnings (P/E) multiple is just 22.7, which suggests many of the obvious risks are already reflected in the stock price. For investors, that shifts the debate from hypergrowth to quality, durability, and capital efficiency.
In practical terms, Nvidia may now be better understood as a value-oriented AI leader rather than a pure growth lottery ticket. The company still has strong fundamentals, but the next phase is more likely to be driven by earnings resilience, buybacks, and cash flow than by the kind of exponential rerating that created its earlier wealth-building reputation.
Should investors buy NVDA now?
Nvidia remains one of the most important companies in global technology and AI infrastructure. Its products are deeply embedded in the buildout of data centers, and demand from the AI ecosystem remains strong. For long-term investors, that makes NVDA a high-quality name to watch closely.
At the same time, the stock is not the same opportunity it was when its market cap was far smaller. Investors should expect more measured upside from here, even if the business continues to outperform operationally. The key is to align expectations with maturity: Nvidia can still compound, but likely not in the same way it once did.
Before you buy stock in Nvidia, consider this: the Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. Historical examples from that service show how early calls can matter: if you invested $1,000 when Netflix was recommended on December 17, 2004, you’d have $398,052; if you invested $1,000 when Nvidia was recommended on April 15, 2005, you’d have $1,181,688.
Stock Advisor’s total average return is 892%, versus 205% for the S&P 500. That record does not change Nvidia’s long-term significance, but it does highlight an important investing lesson: the biggest winners often emerge before they become obvious to the market.
FAQ
Is Nvidia still a millionaire-maker stock?
Not in the classic sense. With a market cap of $4.72 trillion, Nvidia is too large for the kind of explosive upside that typically defines millionaire-maker stocks.
Why is Nvidia still important for AI investing?
Nvidia’s GPUs remain essential for generative AI and data center infrastructure. The company continues to benefit from strong demand, especially as AI capital spending keeps rising.
Is NVDA a good stock for long-term investors?
It can be, depending on expectations. Nvidia still offers strong earnings power, cash flow, and shareholder returns, but investors should view it as a more mature AI leader rather than a high-octane growth story.
