In the world of high-stakes investing, timing can be everything. For Northcape Capital’s Fleur Wright, a 2018 visit to Nvidia’s headquarters in Santa Clara, California, laid the foundation for what would become one of her most significant investment wins. At the time, there was no hint of the explosive growth that generative AI would bring in 2023. Nevertheless, her early confidence in Nvidia’s potential paid off in ways few could have predicted.
Back in 2018, Nvidia was primarily focused on high-performance chips for gaming and cryptocurrency mining. The company’s stock had recently taken a hit, with disappointing earnings and CEO Jensen Huang acknowledging the longer-than-expected effects of a cryptocurrency downturn. Huang remarked at the time, “The crypto hangover lasted longer than we expected,” noting that mining would likely make “no contributions” to the company’s earnings.
Despite these challenges, Wright found something during her visit to Nvidia that strengthened her conviction in the company’s future. While waiting at Nvidia’s offices, she noticed a picture of a new building under construction, set to be double the size of their current headquarters. This small detail sparked a thought in Wright’s mind: “You’re about to double in size.”
“There was a lot of doubt as to whether they really did get crypto wrong,” Wright recalled. “But ultimately, they were able to convince me of the long-term growth in parallel processing.” This belief led her to invest in Nvidia for the Northcape Global Equities Fund in 2019, even though the AI revolution that would transform Nvidia was still years away.
“I completely didn’t pick generative AI,” Wright admitted. “I was kind of really excited by automotive and what that could do, and data centres and cloud computing.”
However, as generative AI, powered by Nvidia’s cutting-edge chips, began to dominate the tech landscape, the company’s stock saw a meteoric rise. From early 2023 to mid-2024, Nvidia’s share price skyrocketed nearly tenfold, driven by the demand for its AI-optimised hardware. Northcape maintained a high-single-digit percentage of its Global Equities Fund in Nvidia throughout this period, reaping significant rewards from the investment.
Yet, despite the overwhelming success, Wright remains humble about the fund’s journey with Nvidia, acknowledging they missed part of the upside. Northcape had fully sold out of its Nvidia position in early 2023, just before the company’s May 25 AI-fuelled profit upgrade that stunned Wall Street and pushed Nvidia towards a $1 trillion market capitalisation. Nvidia’s stock had already surged 120% since the start of 2023, largely driven by the release of ChatGPT in late 2022.
At the time of the fund’s exit, concerns about Nvidia’s valuation were widespread. Trading at a one-year forward price-to-earnings ratio of around 60, some investors hesitated, worried the stock was overvalued. But as Wright noted, many analysts underestimated Nvidia’s earnings potential, and the stock’s value was, in fact, far more reasonable than it seemed.
Since then, Nvidia has continued its climb, reaching a market capitalisation of around $3 trillion, cementing its place as one of the most influential companies in the AI sector. For Wright, the journey underscores the importance of both patience and timing in the investment world—though she couldn’t have predicted Nvidia’s role in the generative AI boom, her early conviction in the company ultimately led to monumental gains for Northcape Capital.
