Should You Consider Buying Nvidia Stock Before the End of 2024? A Historical Perspective

As another year closes in, Nvidia (NASDAQ: NVDA) is once again showing impressive gains. With only a few weeks left in the year, shares of this leading GPU manufacturer have risen significantly.

If you’re among those who haven’t yet invested in Nvidia, you might feel like you’ve missed out on its prior performance. However, as we look ahead to the end of 2024, the question arises: Is it wise to buy Nvidia stock now? Let's examine what historical trends suggest.

A Positive Track Record in Q1

When investing, it’s not always crucial to rush into buying a stock. In many cases, timing isn't everything. Yet, Nvidia presents a notable exception.

Nvidia first went public on January 22, 1999, and since then, it has achieved a remarkable 20 positive returns in the first quarter of the year out of almost 25 quarters. The average gain for these first quarters is a strong 19%. Delaying your purchase until after the first quarter often meant lower returns.

Out of 25 full first quarters since Nvidia's IPO, the stock has shown double-digit percentage gains in 14 of them. Last year was particularly monumental, with shares soaring by 90%. This coming first quarter in 2024 is expected to be impressive as well, with a projected gain of 82.5%, making it the second-best Q1 performance ever.

Of course, Nvidia hasn't been immune to disappointing quarters. For instance, in the first quarter of 2008, the stock dropped nearly 42%. But over the past decade, Nvidia has only reported one negative first quarter, which occurred in Q1 of 2022, when the stock fell around 7%.

Long-Term Performance Matters

While many investors may not buy Nvidia shares to sell them after only three months, it's also important to consider how the stock performs over longer periods.

Nvidia has yielded positive returns in 17 out of 23 three-year spans since its IPO, including the period from 2022 to 2024. The typical return over these three-year windows exceeds 195%.

But holding onto Nvidia shares for five years can be even more rewarding. In fact, the stock has risen in 19 out of 21 five-year periods following its IPO, boasting an average return of a staggering 551%.

Considering historical data, investing in Nvidia stock before the end of the year consistently offers significant returns.

The Current Landscape

On a cautious note, however, one might argue that historical performance may not hold as much weight for future investments in Nvidia. Why? The current market conditions are different from the past.

Several top performances were noted before the generative AI boom. Lower interest rates contributed to past gains, while current competition in AI chip production is ramping up quickly. This could lead to a notable decrease in Nvidia’s future returns due to the saturation of AI chips, stabilizing interest rates, and increasing competition.

Nonetheless, there are strong arguments for Nvidia's future potential. CEO Jensen Huang has indicated that their new Blackwell GPU architecture could not only be Nvidia's most successful product but also a groundbreaking innovation in computing history. Furthermore, with Nvidia now launching new chips annually, the future of more powerful GPUs looks promising.

The field of AI remains in its early stages. Emerging technologies, including artificial general intelligence (AGI), might revolutionize Nvidia's growth trajectory. Beyond AI, the transition from general-purpose computing to accelerated computing might present Nvidia with opportunities worth as much as $1 trillion.

If you believe that Nvidia's growth prospects are likely to improve—and there's considerable rationale behind that belief—then stepping into Nvidia stock now could be a sound investment choice.

Nvidia, Investment, Stocks