£5,000 invested in Nvidia stock just before the tariff news is now worth…
The announcement of global tariffs on 2 April shook financial markets. The implications and subsequent ramping up of tensions between the US and China meant that global tech shares were hit hard. Nvidia (NASDAQ:NVDA) stock experienced high volatility in the immediate aftermath. Yet with news over the weekend of positive talks from both countries, here’s where the share price is now.
Yo-yo movements
I’m going to assume that an investor put £5k in the stock first thing on 1 April, at a price of $107.50. The share price closed yesterday (12 May) at $123, meaning the investor’s up 14.48% over a six-week period. In terms of profit, the unrealised gain would mean the initial investment’s now worth £5,724. Not bad at all!
What’s even more impressive is the volatility during the holding period. When the tariff news first broke, Nvidia stock tumbled. On 4 April, it traded down to $94. After bouncing back, it again moved lower towards $95 later in the month before having another move higher. During April, when the stock was around these levels, the investor would have been almost 13%.
The share price has risen 36% over the past year, but it’s still far off the 52-week highs, which sit at $149.43. This shows that even with the recent surge, there could be further room for the stock to move higher in coming months.
Trade musings
One of the main factors that could push it even higher is continued progress on trade deals between the US and China. Nvidia currently requires licenses to export its H20 AI chip to China. The move’s designed to safeguard national and economic security, according to the US Commerce Department. Others see it as more of a trade bargaining tool, which could be eased or even removed if ties improve. This would be a big positive for the company, with higher revenue potential in a rapidly growing market.
Importantly, even without company-specific factors, the stock could still do well. Nvidia’s a member of the ‘Magnificent Seven’, a group of US mega-cap tech firms. When investor risk sentiment’s positive, they tend to gravitate towards buying these types of growth stocks. So this flow of purchases could help lift the whole group, including Nvidia.
An evolving sector
Despite all of this, one concern is that AI’s being developed at a rapid pace. Nvidia had a clear first-mover advantage. Yet looking forward, cheaper alternatives out of China, along with existing US competitors catching up, could all spell trouble.
Furthermore, the volatile nature of the share price (as shown over the past six weeks) might be enough to put off some. In spite of this, I think it’s an idea for investors to consider, given the potential trajectory of US and China trade talks.
The post £5,000 invested in Nvidia stock just before the tariff news is now worth… appeared first on The Motley Fool UK.
Should you buy Nvidia shares today?
Before you decide, please take a moment to review this first.
Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.
It’s called ‘5 Stocks for Trying to Build Wealth After 50’.
And it’s yours, free.
Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.
And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.
That’s why now could be an ideal time to secure this valuable investment research.
Mark’s ‘Foolish’ analysts have scoured the markets low and high.
This special report reveals 5 of his favourite long-term ‘Buys’.
Please, don’t make any big decisions before seeing them.
More reading
- Does AMD or Nvidia stock offer the best value?
- Iâve been eyeing Nvidia stock, but I just bought this chip giant instead
- Could buying Palantir stock today be like investing in Nvidia in 2020?
- £10,000 invested in Nvidia stock on Liberation Day is now worthâ¦
- After a 1,396% gain, is a weaker Nvidia share price a buying opportunity?
Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
