This year, you can invest $7,000 in your Tax-Free Savings Account (TFSA). But if you had invested around $6,000 equally in Canadian tech stocks Shopify and Dye & Durham during the October 2023 dip, your investment would have now increased to $13,490. It is a good time to sell these stocks and book profits. You can add the $7,000 TFSA contribution and buy Nvidia (NASDAQ: NVDA) stock for US$20,000.
Comparing Apple with Nvidia
Generally, it is suggested you diversify your TSFA portfolio across different sectors to reduce the downside risk. However, if you are looking for a millionaire-maker stock, Nvidia is an investment of choice in all aspects. Think of Nvidia as buying Apple (NASDAQ: AAPL) stock in 2018, when it became the first stock to hit the US$1 trillion market cap. At that time, if you thought the stock was expensive and refrained from buying it, you missed its rally to a $3 trillion market cap in 2023.
Even if you invested US$20,000 in Apple at its 2018 peak, it would now be $63,800. Towards the end of December 2018, tech stocks crashed amid the US-China trade war. Had you invested then, your $20,000 would be US$83,300. Buying the dip in a high-growth stock is what it takes to convert $20,000 into millions, provided you stay invested for the long term.
In the same way Apple was a no-brainer stock to buy in 2018, Nvidia is a no-brainer stock to buy now. You can buy it now at its all-time high of over US$900 or wait for a 10–14% dip. If you had invested US$20,000 in Nvidia during the December 2018 tech dip, it would now be worth $441,700.
Nvidia has all the qualities to make you a millionaire. For those who invested in the stock in June 2014, when artificial intelligence (AI) was in the research phase, your US$20,000 would be worth US$3.7 million. Two secular trends made Nvidia investors millionaires – PC gaming and AI data centres. It can still make millionaires in the next 10 years, riding on two other tech waves of autonomous driving and industrial digitization.
Three qualities that make Nvidia a millionaire maker
Nvidia has three qualities that make me bullish on its high growth.
- The first quality is its high-performance graphics processing unit (GPU). We are in an age where accelerated computing is replacing central processing unit (CPU) computing. Since November 2022, Nvidia’s stock has soared around 540% on the back of the Chat GPT frenzy as all companies invested in generative AI. The company’s revenue surged 126% to $60.9 billion in 2023, with the data centre contributing US$47.5 billion (78% of the overall revenue). In 2021, data centres accounted for 40% of Nvidia’s revenue.
- The second quality of Nvidia is it is unbeatable in AI and is the preferred choice of industry. Even in the autonomous driving space, it is leading with the most advanced tech. Autonomous driving has a high total addressable market as the GPU maker will participate on multiple fronts, from training the autonomous software on simulations, to generative AI for inferencing, to embedded units that will collect data and act on real-time updates.
- The third quality is Nvidia never stops innovating. The success of autonomous driving can be applied to other mission-critical tasks like healthcare diagnostics and drug discovery, industrial designs, and more. Unlike Apple, which is going through technology fatigue, Nvidia has an ocean of technological possibilities yet to be tapped.
With such secular growth trends in its arsenal and unbeatable product performance, Nvidia is a stock to buy and hold for the long term. For such stocks, valuations don’t play a major role. It is an evergreen stock you can buy anytime.
Final thoughts
While you should diversify your TFSA portfolio across dividend and growth stocks of different sectors, invest at least $20,000 in Nvidia and hold it for the long term. I suggest not waiting for a dip and buying the stock before it rallies further. You could invest more when the stock dips. You won’t miss out on Nvidia’s future rally.
