[Mag 7 Stock Analysis Part.1] History of NVIDIA Stock Price Fluctuations: From Gaming GPUs to the Absolute Ruler of the AI Revolution

Among the so-called 'Magnificent 7' (Mag 7) companies currently leading the global stock market, there is one that exudes an overwhelmingly dominant presence. It is NVIDIA (Ticker: NVDA), the ultimate beneficiary of the artificial intelligence (AI) era and the company that completely shifted the paradigm of the global semiconductor market.

To maintain a successful investment journey and formulate a solid asset liquidation strategy for a specific target date, it is absolutely essential to review the historical waves and growth patterns of the stocks in our portfolio. Today, as the first installment of our deep dive into the stock history of the Mag 7, we will thoroughly examine the turbulent stock price history of NVIDIA—exploring how a simple graphics card manufacturer transformed into a colossal enterprise competing for the very top spot in global market capitalization.

1. A Spectacular IPO, But a Rocky Dot-Com Bubble Era (1999 ~ Early 2010s)

In January 1999, NVIDIA took its first steps into the public stock market on the NASDAQ at a price of $12 per share (on a pre-split basis). At the time, NVIDIA was generating massive buzz among PC gamers by launching the world's first GPU (Graphics Processing Unit), the 'GeForce 256.'

• The Wave of the Dot-Com Bubble: Riding the frenzy of the IT dot-com bubble that swept the market right after its listing, NVIDIA's stock price showed a strong upward trend. However, as the bubble burst in the early 2000s, the stock had to endure a severe correction period.

• The Dilemma of Growth: Throughout the 2000s, NVIDIA steadily increased its revenue alongside the growth of the PC gaming market. However, due to the market's narrow perception of the company as merely a "maker of graphics cards for games," the stock price was trapped in a box range for a long time. Back then, Intel was the absolute powerhouse of the semiconductor market, and NVIDIA was seen as just a niche player overshadowed by it.

However, during this period, NVIDIA CEO Jensen Huang made a monumental decision that would determine the company's fate. In 2006, he announced a software platform called CUDA (Compute Unified Device Architecture). When the company poured massive R&D funds into this platform, which didn't immediately generate money, Wall Street's reaction was freezing cold. Nobody could have predicted that this would become a massive economic moat in the future AI era.

2. Beyond Gaming to Crypto and Data Centers: A Genuine Quantum Leap (2016 ~ 2021)

After moving sideways for over a decade, NVIDIA's stock price entered a completely different trajectory starting in 2016. This was because two massive themes formed that explosively pushed the stock price higher.

① The Cryptocurrency Mining Boom and the First Surge

As the cryptocurrency market, including Bitcoin and Ethereum, grew explosively in 2017, NVIDIA's GPUs—capable of processing complex calculations quickly—became an absolute necessity for crypto miners. Demand surged so heavily that graphics cards literally dried up in the market, immediately leading to tremendous earnings growth and a spike in NVIDIA's stock price. However, as the crypto market crashed in 2018, NVIDIA also experienced painful growing pains, suffering a steep short-term drop (halving from its peak).

② The Surge in Data Center Revenue and Pandemic Tailwinds

The real growth was happening elsewhere. Big Tech companies like Amazon (AWS), Microsoft (Azure), and Google (GCP) began expanding their cloud data centers on a massive scale, sweeping up NVIDIA's high-performance server GPUs. On top of this, the COVID-19 pandemic in 2020 added fuel to the fire. The shift to remote work, online learning, and the metaverse craze caused demand for PCs and servers to skyrocket. From 2020 to the end of 2021, NVIDIA's stock price trended upward without resting, setting new all-time highs daily. During this period, NVIDIA was re-evaluated not just as a gaming hardware company, but as a core enterprise of global IT infrastructure.

3. The Emergence of ChatGPT and Becoming the Leading Stock of the AI Revolution (2022 ~ Present)

The year 2022 was a harsh winter for the entire NASDAQ due to a deteriorating macroeconomic environment and rising interest rates, and NVIDIA was no exception, plummeting over 60% from its peak. However, in November 2022, a monumental event occurred that would change the landscape of the world: the launch of OpenAI's 'ChatGPT'.

• The Start of the Generative AI Supercycle: The generative AI whirlwind sparked by ChatGPT triggered an AI arms race among Big Tech companies worldwide. To train and infer AI models, NVIDIA's ultra-high-performance AI chips (like the A100 and H100) were absolutely imperative.

• A Historic Earning Surprise: In May 2023, NVIDIA released a phenomenal forward guidance that exceeded Wall Street's estimates by more than 50%. On that day alone, the stock surged over 20%, catapulting the company into the $1 trillion market cap club in a single leap.

• Endless Stock Splits and Breaking the $3 Trillion Mark: Since then, NVIDIA's earnings have surpassed market expectations every single quarter. With supply unable to keep up with overflowing demand, the stock price rose vertically throughout 2023 and 2024. In the first half of 2024, the company executed a 10-for-1 stock split to increase retail accessibility, and it is writing unprecedented history in the semiconductor sector by surpassing Microsoft and Apple to claim the number one spot in global market capitalization (breaking the $3 trillion mark).

4. Implications from NVIDIA's Stock Price History

Looking at NVIDIA's long-term stock chart from its IPO in 1999 to the present, there were several terrifying crashes of -50% or more along the way. There were countless crises, including the bursting of the dot-com bubble, the 2018 cryptocurrency crash, and the 2022 rate hike cycle.

However, from a long-term perspective, NVIDIA proved the fundamental truth that the stock price of a company that builds an overwhelming technological moat (the CUDA platform) and monopolizes the core infrastructure of future industries (Gaming ➡️ Cloud ➡️ AI) will ultimately trend upward.

Today, there are many voices worrying about whether NVIDIA's stock is overvalued in the short term or what will happen if the AI bubble bursts. In the next part, based on NVIDIA's past trajectory, I will organize my personal thoughts on its future stock price outlook and the position we should take as investors.

💡 Summary & Takeaways

• 1999~Early 2010s: Focus on gaming GPUs, the dot-com bubble and sideways market, planting the seeds for the CUDA ecosystem.

• 2016~2021: A quantum leap in stock price driven by explosive crypto mining demand and cloud data center infrastructure expansion.

• 2022~Present: The generative AI revolution sparked by ChatGPT, leaping to #1 in global market cap by monopolizing global AI chips.

(To be continued in Part.2: 'NVIDIA's Future Outlook and Investment Strategy')