Chip maker Nvidia (NVDA +0.39%) has been one of the great investing stories in tech over the past couple of years. With the emergence of OpenAI's ChatGPT and companies investing heavily in artificial intelligence (AI), Nvidia's business is booming as its chips play a big role in helping companies develop their own AI models. That business boom is helping the stock soar. In the past 12 months, its price is up about 238%.
But as well as Nvidia's stock has done in the past year, there are a couple of other large-cap stocks that have performed even better. Two stocks that have roughly doubled Nvidia's returns over the past 12 months include Super Micro Computer (SMCI +1.27%) and Carvana (CVNA +2.26%). Here's a look at their returns over this time frame and why they have been such hot buys, and whether they still make for good investments today.
NASDAQ: SMCI
Key Data Points
Super Micro Computer: 445%
With gains of 445%, Super Micro's stock has dwarfed Nvidia's 12-month returns. As with Nvidia, this has become a popular AI investment to own as demand for more servers and greater computing power has made investors bullish on the company's long-term prospects.
Super Micro's growth rate has been amazing, with sales totaling just under $3.9 billion through the first three months of the year -- three times the $1.3 billion it reported in the previous year. The company generates revenue primarily from its server and storage systems segment. Subsystems and accessories, its other segment, accounted for a relatively modest $152 million last quarter, representing just 4% of the company's overall top line. Profitability has also been improving, with Super Micro reporting $402 million in profit during the period, which was more than four times the $86 million in earnings it posted in the prior-year period.
A big reason for Super Micro's enhanced returns over the past year is simply due to its much smaller valuation. Even with its massive returns, Super Micro's market cap is at $53 billion -- nowhere near Nvidia's mammoth $2.3 trillion valuation. What's encouraging is that the stock trades at a forward price-to-earnings (P/E) ratio of just 25, which is fairly modest given the gains the stock has already achieved. Nvidia, by comparison, trades at a forward P/E of 38.
With tremendous growth, solid prospects for more, and a fairly reasonable valuation given its long-term growth opportunities, it may still not be too late to invest in Super Micro stock.
NYSE: CVNA
Key Data Points
Carvana: 876%
Investors could have earned an even greater return from Carvana's stock over the past year but not without taking on a lot more risk. This once-beaten-down stock would have been a nine-bagger for investors who loaded up on it a year ago.
It wasn't too long ago that this was the stock nobody wanted: In 2022, shares of Carvana plummeted an amazing 98%. The online used-car retailer was burning through cash, interest rates began to rise, and demand for used cars softened.
The stock is heavily shorted, and that plays a big part in its overall volatility. While the short interest as a percentage of float has come down over the past year, it remains fairly high at around 30%.
CVNA Percent of Float Short data by YCharts.
The company has been proving its doubters wrong, at least to some extent, and that has helped drive the recent bullishness.
For the period ending March 31, Carvana posted a surprise profit of $49 million, which is a drastic improvement from the $286 million loss it incurred in the same period a year earlier. Sales of $3.1 billion were also up by 17% year over year. The company's cash-flow statement has also shown improvement as last quarter Carvana generated $101 million in cash from its day-to-day operating activities, while a year ago it burned through $66 million.
Carvana generated some encouraging results last quarter, but that doesn't mean it's smooth sailing for the business as it's possible that a recession could still be on the horizon. And while the company has been doing better, it still hasn't proven it can generate consistent profits; its profit margin last quarter was just 1.6%.
Investors may be better off waiting at least a couple of quarters before assessing whether Carvana is truly a good buy or not, as the stock still possesses some considerable risk, especially given its volatility over the past few years and high short interest.
