Investing in tech stocks yielded some magnificent, life-changing returns for investors. And specifically, companies with exposure to artificial intelligence (AI) performed exceptionally well in recent years. Nvidia (NVDA -0.36%), Advanced Micro Devices (AMD 1.72%), and Super Micro Computer (SMCI -7.98%) generated more than 30x returns in a span of just the past 10 years. Here's how much a $30,000 investment into these stocks a decade ago would be worth today, and why they could still be good buys right now.
Nvidia: $8.1 million
A $30,000 investment into chipmaker Nvidia back in 2014 would be worth more than $8.1 million now. That amounts to an astonishing return of around 27,000%. Shares of Nvidia have been taking off in the past few years due to the rapid emergence of AI models and chatbots, which it is poised to help grow with its AI chips.
As a leading company and the brand that's most recognizable with AI these days, Nvidia benefited the most from the growing excitement in tech. A particularly strong segment of its business is in data centers. In its most recent quarter, which ended on April 28, that segment generated $22.6 billion in sales, which soared 427% when compared to the prior-year period. Nvidia's overall sales growth of 262% has already been incredible, but its data center numbers stand out even more.
Between gaming, data centers, automotive revenue, and other opportunities, this is a business that still has much more room to get bigger. While Nvidia is at a $3 trillion market cap and is trading at more than 70 times earnings, given its dominance in AI, it can still be a good stock to buy and hold. But with an already large market cap, investors should be careful to temper their expectations for the AI stock. It would be extremely difficult for it to replicate the type of returns it has generated over the past 10 years.
Advanced Micro Devices: $1.2 million
Another chipmaker to make this list is Advanced Micro Devices, better known as AMD. Although it hasn't been generating as impressive numbers as Nvidia has, its returns have still been phenomenal over the years.
AMD's business is much smaller than Nvidia's and its chips aren't in as high demand as Nvidia's are, at least not yet, as AMD has been a slower in launching AI-powered chips than its rival. During the first three months of the year, AMD reported $5.5 billion in net revenue, which rose by a fairly modest 2% year over year. And while the business is profitable, its margin has recently been in the single digits, whereas Nvidia's is well above even 40%.
Investors haven't been as bullish on AMD and while it has been a hot buy over the years, it hasn't spiked as drastically as Nvidia has in the past few years due to AI. It's a good growth opportunity for the business, but it isn't leading to a surge in sales, for now, anyway. CEO Lisa Su, however, believes there's still a lot of room to achieve better results in the future. "Moving forward, we are well positioned to continue driving revenue growth and margin improvement while investing in the large AI opportunities ahead," she said in the company's first-quarter earnings release.
At a much smaller market cap of $260 billion, AMD is a potentially underrated AI stock to buy; it's up just 9% this year. For investors who are willing to be patient, AMD could be a good buy as it's still a top chip company and although it may not be doing as well as Nvidia, with a more modest market cap, it may have more room to generate larger returns down the road.
Super Micro Computer: $1.06 million
The last AI stock to round out this list is Super Micro Computer, often referred to as just Supermicro. The company's server and storage system solutions are pivotal for companies looking to ramp up their infrastructure and strengthen their AI capabilities. As with Nvidia, the past few years have been particularly strong for the stock.
Business has been booming for Supermicro with sales growth of over 200% in its most recent quarter (which ended on March 31) as its top line jumped from less than $1.3 billion a year ago to nearly $3.9 billion. It has also generated some decent 10% margins during the period. For the full fiscal year, which ends in June, it expects its top line to come in at around $15 billion, which would be more than 4 times the $3.6 billion it posted for fiscal 2021.
At a market cap of just over $50 billion, Supermicro isn't nearly as large of a stock as Nvidia or AMD. Its valuation is arguably also the most attractive, at a price-to-earnings multiple of 50. For AI investors, this may be a good growth stock to consider buying as companies will need data centers and better infrastructure as they develop their AI capabilities.
