$4,000 invested in Nvidia ten years ago would make you a millionaire today

Nvidia (NVDA 1.99%) is on one of the biggest runs investors have seen in the past few years. However, his dominance lasts much longer. Nvidia and its market-leading graphics processing units (GPUs) have provided investors with nearly unprecedented performance over the past decade. You’re probably a millionaire if you invested a fairly reasonable amount of money in a company’s stock ten years ago and never sold it.

I think investors can also take away a few key takeaways from Nvidia stock, as its situation may not be as unique as you think.

Nvidia was interrupted several times

If you had invested just $4,000 in Nvidia stock ten years ago, your initial investment would now be worth this amount:

NVDA data from YCharts

That’s incredible growth in just ten years, and many investors may be kicking themselves for not making the choice to buy shares 10 years ago. However, this is the wrong way to look at it. While Nvidia is unique, a stock that is growing at an incredible rate is not. You can usually find a few companies that do this every decade, making these stocks rare.

The hardest part is identifying them and holding on through all the ups and downs.

Since the drops, it hasn’t been all smooth sailing for Nvidia investors. Over the past decade, Nvidia has gone through two periods in which it lost more than half its value. The chart below shows the percentage deviation from the last high, which helps illustrate the depth of the various drawdowns.

NVDA data from YCharts

As recently as the end of 2022, investors faced a 66% drop that wiped out all gains from 2020.

So, one of the factors investors need to keep in mind if they’re going to capitalize on these long-term winners is that there are likely to be huge drawdowns that make it seem like the only answer is to sell. However, investors need to ask whether the current problem will cause the stock to fall five years from now. If the answer is yes, it may be time to consider selling. If not, then you will have to ignore what the rest of the market is doing and be patient.

It’s not easy, but it’s the only way to hold the stock long enough for $4,000 to become $1 million.

Unfortunately, buying and holding stocks is quite easy compared to identifying companies with such potential.

The key is to find companies with mass market growth potential.

When I look for companies with huge growth potential, what I look for most is mass market appeal. Essentially, does this company have a product that can affect almost every person in the world?

This kind of thinking could attract big winners like Amazon And Alphabetas the masses use their products and change people’s behavior.

Unfortunately, Nvidia has slipped under that radar. Since its core product is a GPU that was originally designed to handle game graphics, investors would be forgiven if they didn’t see the bigger picture. GPUs are incredible pieces of hardware that can process multiple calculations in parallel, making them useful in data centers for tasks such as engineering simulations or training artificial intelligence (AI) models. It’s the latter that’s driven Nvidia’s latest stock rally, a trend many investors knew would eventually happen.

Thus, since Nvidia makes a product that could eventually make an impact on the mass market, it could be called a stock with huge growth potential. I’m not saying it was obvious ten years ago, but the signs were there.

Investors can use these filters to find companies that can influence the way people live and do business. If you find one, it’s best to stick it out through the ups and downs. In five years, what’s dragging him down today may not matter.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, chief executive of Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions at Alphabet and Amazon. The Motley Fool holds positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.