Coming up just short of the 4% gain that the S&P 500 has enjoyed since the start of the year, Nvidia (NASDAQ: NVDA) has risen only about 3.4% in 2025. It may feel unfamiliar to see the artificial intelligence (AI) superstar in this position considering it soared 171% in 2024 while the S&P 500 ripped more than 23% higher.
But how about expanding your perspective to a few years ago? Had you picked up Nvidia stock five years ago, would you be looking at a profit from your investment or would you still be waiting for it to recover?
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While AI stocks have only become prominent on most investors' radars in the past couple of years, Nvidia had been working to emerge as the industry leader even back in 2020, when it acquired Swiftstack, a data storage company whose technology had already been used in Nvidia's graphics processing units (GPUs). A flurry of transactions continued over the ensuing years as Nvidia pursued an aggressive growth-through-acquisition strategy.
A more robust intellectual property portfolio isn't the only hallmark of Nvidia's history over the past five years. The company has also achieved improvements on a variety of financial metrics as customers continue to source their GPUs and other semiconductors from Nvidia. From growing its top line to generating stronger earnings and free cash flow, Nvidia's financial successes have provided investors with plenty to cheer.
NVDA Revenue (Annual) data by YCharts
Over the past five years, the market has consistently rewarded Nvidia for its achievements, launching it about 1,820% higher. Those who purchased $1,000 in stock five years ago have seen their original investments grow to $19,270 as I write this.
Despite Nvidia stock's stellar performance, those interested in a position still have a great opportunity with the stock trading at a discount to its historical valuation. Shares are trading at 54.8 times trailing earnings, which admittedly seems pricey, but it's less expensive than their five-year average P/E of 73.4.
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*Stock Advisor returns as of February 3, 2025
Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.