Nvidia stock recently became the most valuable publicly traded company in the world, surpassing Microsoft. Its shares have risen over 200% in the past year and are now worth over $3.3 trillion. Looking back at the history of other top-valued companies, such as General Electric, Microsoft, ExxonMobil, and Apple, we see that once a company reaches the top, it tends to stay there for several years and continue to see growth in stock price.
For example, Microsoft doubled its stock price less than two years after initially becoming the most valuable company. Both ExxonMobil and Apple saw significant increases in their stock prices after reaching the top spot as well. In the case of Apple, the stock doubled again over the next five years. This trend suggests that Nvidia stock could continue to rise in value and remain at the top for several years.
Additionally, previous most valuable stocks outperformed the S&P 500 for the next five years after reaching the top. This indicates that companies don’t become the most valuable in the world without good reason, and positive trends within the business can lead to continued growth in stock price.
Nvidia is benefiting from the growing adoption of artificial intelligence, which is likely to continue in the coming years. While the stock’s high valuation is a cause for concern for some investors, history suggests that Nvidia stock could still have room to grow and outperform the market in the future as the AI trend develops.
In conclusion, while the high valuation of Nvidia stock may be a worry for some investors, historical trends suggest that the stock has not yet peaked and could continue to see growth in the coming years. As the company benefits from the increasing adoption of AI technology, it may remain at the top of the market for an extended period and continue to outperform the S&P 500.
Article Source
https://www.fool.com/investing/2024/06/20/nvidia-pass-microsoft-most-valuable-stock/