Despite an ongoing pandemic and the U.S. economy barely limping along, the Nasdaq is still trading more than 60% above its March lows. The surge in tech stocks in 2020 has understandably led investors to draw comparisons to the dot-com bubble in 2000.
The Nasdaq ultimately peaked at 5,048.62 on March 10, 2000. Of course, some dot-com bubble stocks have performed much better than others in the 20 years since the bubble burst.
Nvidia’s Past 20 Years: Without a doubt, semiconductor stock NVIDIA Corporation (NASDAQ:NVDA). Has been one of the top market performers of the past two decades.
Ironically, Nvidia actually went public back in 1999 during the height of the dot-com bubble. At the time, the company was a leading producer of PC graphics cards, a leadership position it maintains to this day. However, Nvidia IPO investors likely never could have foreseen the massive surge of PC video gaming and the rise of esports and online streaming.
Nvidia’s explosive growth over the past 20 years has been driven by a number of the biggest and most transformative trends in tech, including cloud services, artificial intelligence and automation. At the time of its 1999 IPO, Nvidia had just 250 employees and a valuation of around $626 million.
Dot-Com Bubble Fallout: Nvidia’s high watermark of the dot-com bubble was $117 back in 2000 prior to its first of four stock splits starting in June 2000. When the bubble burst, Nvidia held up relatively well, dropping just 15.1% in the year following the Nasdaq top compared to a 59.3% overall decline for the index. By March 2002, Nvidia was up 31% from the dot-com bubble peak, while the Nasdaq was down 61.7%.
After adjusting for its additional splits, Nvidia’s share price returned to as high as $36.48 prior to the financial crisis in 2007. During the sell-off in 2009, Nvidia shares dropped to a split-adjusted $5.49 before bouncing back. The stock was once again making all-time highs by 2016. From that point forward, there was no looking back.
Nvidia hit the split-adjusted $100 level in late 2016 and the $200 level in 2017 before peaking at $502 this year.
Nvidia investors who bought at the dot-com bubble peak had to wait less than two years to get back to even. Those that held on to this day have made a killing.
In fact, $1,000 invested in Nvidia stock at the dot-com bubble peak would be worth about $54,100 today, assuming reinvested dividends.