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In several of its chosen industries – specialized electronics, high-performance computing, data science, and AI – Nvidia (NVDA) sets the standard by which its competitors are judged.
As the third most valuable tech company by market capitalization, it offers relative stability; with significant exposure to fast-growing markets, its upside is also high.
Here, we look at how to buy stock in Nvidia, providing you with a step-by-step guide and major factors to consider before making any investment decision.
Let’s get right into the nitty-gritty of how to invest in Nvidia as a retail investor.
Key Takeaways
- Nvidia’s stock price has shown spectacular growth over the last 18 months, while the company’s medium-term outlook seems rosy, buoyed by demand for AI chips.
- However, the market has already priced these factors in. You should conduct a thorough analysis before deciding the best time to invest in Nvidia.
- You can invest in Nvidia through a brokerage or gain access to NVDA stock through mutual funds and ETFs.
- As of May 22, 2024, Nvidia has gained 2,517% in the last five years, 204% in the previous 12 months, and 97% year-to-date.
How to Buy Nvidia Stock: A Step-By-Step Guide
Whether a blue-chip company like Nvidia or a Nasdaq up-and-comer, the process for purchasing shares is much the same.
Let us walk you through it, starting with determining whether it’s a good idea to buy Nvidia stock in the first place.
1. Conduct Your Analysis
In carpentry, the operative saying is: “Measure twice, cut once.” Before you commit actual dollars to an investment in this particular stock (and after practicing with virtual money), you need to ask yourself: Is Nvidia stock a good investment?
Examine this question from several angles, including recent performance, future prospects, and possible regulatory challenges.
You also need to consider the reliability of different sources. Did you get a “hot tip” from a guy you met in a bar or read a vague rumor about an upcoming Nvidia stock split? Neither is exactly a solid basis on which to risk money.
Did you, on the other hand, conduct detailed research on the market for AI hardware and software?
If you want to invest in specific stocks, you must do your homework, which generally means becoming an expert in a particular sector.
If you’re not willing to put in the necessary time, you’re probably better off investing in exchange-traded funds (ETFs) with a tech focus.
2. Decide on a Budget
How much do you want to invest in Nvidia?
First, consider the available capital for your entire portfolio and how you plan to add to it over time, for example, using a dollar-cost averaging approach. Then, break this figure down to decide how much to invest in Nvidia stock and others.
Consider the fact that buying single stocks means less diversification than investing in a mutual fund or ETF.
For this reason, a good rule of thumb is to place no more than 5% to 10% of your total portfolio in any individual stock.
3. Open a Brokerage Account
When it comes to where to buy Nvidia stock, you are spoiled for choice. A traditional, flesh-and-blood stockbroker can provide expert advice. However, they can also charge some pretty stiff fees, making this kind of service feasible only if your portfolio tops five figures.
Stock trading apps, on the other hand, frequently boast very low account fees and trading commissions.
In addition, they include features like fractional share trading: instead of having to buy a whole share for something in the region of $900 (or $450 each, if an anticipated NVDA split happens), you can invest your chosen budget in increments of as little as a dollar.
4. Buying Nvidia Stock
Once you’ve done the above, there’s no real mystery as to how to buy Nvidia stock.
Simply log into your brokerage account or app, select the NVDA ticker symbol, enter a dollar amount or number of shares, and confirm your order.
5. Track Your NVDA Investment’s Performance
It is certainly possible to become too obsessed with the daily ups and downs of your investments’ values. Worrying about every little fluctuation serves no purpose and only raises your blood pressure.
That being said, you will definitely want to keep an eye on Nvidia news from now on.
By and large, technology stocks rise and fall at roughly the same rate. If your NVDA investment is falling behind the Nasdaq Composite Index or losing ground to similar companies, AMD and Intel in particular, you’ll have to figure out if what you’re seeing is a temporary blip or an indication that you should divest.
How to Sell Nvidia Stock
Online brokerages and investment apps make selling a stock as easy as buying it.
Note that you can specify both purchase and sale orders in two ways: at the current market value, which fluctuates by the hour whenever the stock exchange is open, or as a “limit order.”
This simply means that the transaction is executed when the Nvidia stock price reaches a number you choose.
How to Invest in Nvidia Through Investment Funds
Many mutual funds and ETFs own stock in Nvidia, with several specializing in the technology sector.
Putting your money into one of these rather than buying shares in individual companies takes much of the risk and guesswork out of investing.
As your portfolio will be spread among dozens, if not hundreds of different stocks, you’ll be much better insulated against short-term market volatility.
According to ETF.com, 498 ETFs holding NVDA stock are available for trading as of May 15, 2024.
Top 10 ETFs That Hold NVDA Stock
| Ticker | Fund Name | Segment | NVDA Allocation % | Market Value |
| NVDX | T-Rex 2X Long NVIDIA Daily Target ETF | Leveraged Equity: U.S. Semiconductors | 75.82% | $740.31M |
| USD | ProShares Ultra Semiconductors | Leveraged Equity: U.S. Semiconductors | 33.60% | $265.05M |
| SHOC | Strive U.S. Semiconductor ETF | Equity: U.S. Semiconductors | 27.00% | $16.76M |
| WUGI | AXS Esoterica NextG Economy ETF | Equity: Global 5G | 26.67% | $7.40M |
| SMH | VanEck Semiconductor ETF | Equity: Global Semiconductors | 20.60% | $3.87B |
| DARP | Grizzle Growth ETF | Equity: Global Broad Thematic | 19.50% | $2.56M |
| FDG | American Century Focused Dynamic Growth ETF | Equity: U.S. – Total Market Growth | 14.86% | $31.57M |
| FFOG | Franklin Focused Growth ETF | Equity: Global – Total Market Growth | 13.96% | $10.28M |
| LRNZ | TrueShares Technology, AI & Deep Learning ETF | Equity: U.S. Robotics & AI | 13.45% | $5.28M |
| SOXQ | Invesco PHLX Semiconductor ETF | Equity: U.S. Semiconductors | 13.37% | $50.51M |
Source: etf.com
Nvidia Stock Splits & How They Affect Investors
When a share’s price climbs to a level where it’s unaffordable to small investors, the board or shareholders of a company may decide to “split” the stock.
This simply means that each share is divided into two (or four, or whatever proportion is decided); each portion can then be traded as a discrete entity.
Clearly, making shares cheaper means making them more accessible to the public, meaning that the potential market for them becomes larger, which makes the stock more liquid.
Nvidia’s stock split history certainly indicates that this may happen soon: the company has authorized no fewer than five splits since 2000, not to mention that the stock’s price has grown by over 600% since October 2022.
Should this affect your decision to buy Nvidia stock or perhaps sell it off? Not really.
Announcing a split is seen as a sign that a business is thriving and often leads to a temporary boost in share prices.
This doesn’t impact the company’s underlying health, though. Regardless of how many shares you own before and after a stock split, the value of your investment effectively remains the same.
Nvidia Dividends
Dividends — cash payments made to shareholders — are disbursed solely at the discretion of each company’s management.
Naturally, distributing profits this way means that less money is available for capital expenditures and new projects; given Nvidia’s strategy of rapid growth, it’s understandable that they prefer to re-invest in their own expansion and pay no dividends.
The most reliable indicator of future dividend income is the company’s historic record.
Nvidia has always tended to release only small dividend payments, with a yield of 0.02%, paid quarterly.
In addition, its board has shown no indication of wanting to change this policy. If you rely on dividend income instead of a return in the form of rising share prices, Nvidia may not be a good investment.
The Bottom Line: Should I Buy Nvidia stock?
Few companies can match Nvidia for sheer horsepower. Its stellar recent growth, strong financial position, and dominant market share in several industries draw investors’ attention.
Being linked to both AI and video gaming, the company also has a pretty “cool” reputation and enjoys a lot of media exposure.
The flipside of this is that neither you (nor the author) were the first to figure all this out. If you bought Nvidia stock a year or two ago, you’re probably laughing right now, but the share price cannot continue its meteoric rise indefinitely.
If you want to invest in Nvidia, make sure to keep your portfolio diversified with eggs in multiple baskets.
Do your own research and always remember your investment decision depends on your attitude to risk, your expertise in the stock market, the spread of your portfolio, and how comfortable you feel about losing money.
The information in this guide does not constitute investment advice and is meant for informational purposes only.
FAQs
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References
- Companies ranked by Market Cap – CompaniesMarketCap.com (Companiesmarketcap)
- EU Investigates GPU Market Abuse in Wake of Nvidia Office Raid (Tomshardware)
- Will Nvidia Stock Split In 2024? (Forbes)
- Technology Equities ETFs (Etfdb)
- NVDA NVIDIA Corporation (Etf)
