Investing in Stocks During Recession
A recession might seem like a daunting time for investing, but history shows that it can be an opportunity for those who choose wisely and hold onto their investments for the long term. Two prime examples of long-term investment success are Nvidia and Super Micro Computer (Supermicro). If you had invested $25,000 in each of these companies right after the 2008-2009 Great Recession, you would be looking at nearly $11 million today.
Nvidia: The AI Powerhouse
If you put $25,000 into Nvidia's stock in July 2009, today, your investment would have grown to an astonishing $8.9 million. This dramatic rise is largely due to Nvidia's leadership in the field of artificial intelligence (AI). Nvidia's chips are crucial in developing AI models and software, making the company synonymous with AI advances.
Despite recent fluctuations in stock value, Nvidia's stock has been a phenomenal long-term investment. As AI continues to evolve, Nvidia's dominance and its substantial revenue growth — from $16.7 billion to nearly $61 billion in recent years — show the company's potential. Nvidia's earnings have also soared from $4.3 billion to a staggering $29.8 billion.
While investing in Nvidia still holds promise due to its strong position in AI chips and data centers, it is essential to be prepared for potential volatility, as its current price-to-earnings (P/E) ratio exceeds 40.
Supermicro: A Cloud and Storage Star
Similarly, a $25,000 investment in Supermicro in July 2009 would now be worth about $2 million. This company's stock has seen significant growth due to its capabilities in cloud and storage solutions essential for supporting AI infrastructure.
Supermicro's business has thrived as companies expand their digital offerings, and the demand for their servers and storage solutions continues to grow. From fiscal 2020 to now, Supermicro's quarterly revenue has surpassed its annual revenue of $3.3 billion from just a few years ago.
With a forward P/E of 17, Supermicro's stock may appear relatively undervalued given its robust performance. Thus, it remains a solid option for those looking to invest in tech stocks with substantial growth potential.
Long-Term Investment Takeaway
The success stories of Nvidia and Supermicro highlight the importance of investing in growing industries and having patience during turbulent economic times. While both companies have benefited immensely from the AI revolution, there are still opportunities for investors today as this field continues to advance. However, potential investors should consider market volatility and conduct thorough research to make informed financial decisions.
