10 Best-Performing S&P 500 Stocks in the Last 3 Years

2. NVIDIA Corporation (NASDAQ:NVDA) 

3Y CAGR: 82.08%

NVIDIA (NASDAQ:NVDA), for all intents and purposes, is considered the driving force behind the AI boom, especially on the hardware side. Nvidia’s core business revolves around designing Graphic Processing Units (GPUs). The company’s biggest market is the gaming industry since GPUs are almost essential for high-performance rendering due to their parallel processing capabilities. As it turns out, GPUs are also incredibly useful for training AI models for the same reason, since AI models require a lot of matrix calculations simultaneously.

It goes without saying that Nvidia isn’t the sole GPU designer but what put it at an advantage over its competitors is its proprietary parallel computing platform – CUDA. Having a GPU market share of 70.5% as of 2016, Nvidia recognized the need for a programmable architecture very early since programming parallel processing is recognized as notoriously difficult. The CUDA platform is now supported by a library of thousands of specific applications, which makes it hard to compete with Nvidia in the space of parallel programming platforms. This, coupled with the explosive demand for GPUs for training AI models, resulted in NVDA becoming the most valuable company in the world in June 2024 before Apple regained the top spot for itself. NVDA grew at an annualized rate of 82% over the past three years, and has gained nearly 212% over the past year and 184% year-to-date.

Nvidia’s highly anticipated GPU – Blackwell – is expected to offer substantial inference performance gains over its previous GPUs, and is already experiencing a high level of demand from hyperscalers. The GPU will be rolled out in Q4, 2024, but has already been booked out for 12 months.

This is what Stacy Rasgon, a Bernstein senior analyst, had to say about NVIDIA (NASDAQ:NVDA) in one of the latest CNBC programs:

“People are getting excited about the story again as we approach earnings, year-end, and next year when the new platform with Blackwell starts to ramp up. By all indications—based on supply chain checks and everything else—demand for this product looks off the charts.”

The analyst believes the stock is trading at a discount:

“It’s much cheaper today than it was before the run started a year and a half ago. The stock has risen significantly, but earnings have increased even more than the stock.”