The 5 Best S&P 500 Stocks of the Last 10 Years

The article highlights the top five S&P 500 stocks by 10-year performance, led by Nvidia (31,161% return), Advanced Micro Devices (9,225%), and Arista Networks (3,489%), all significantly outperforming the S&P 500's 310%. This exceptional growth is largely attributed to surging demand in artificial intelligence and cloud infrastructure, with Nvidia's GPUs being central to AI development, driving its Q2 revenue up 56% to $46.7 billion. While AMD also saw strong revenue growth, its nascent AI data center segment and U.S. export controls have presented challenges, illustrating the competitive dynamics and geopolitical risks within the high-growth semiconductor sector.

Analysis

The technology sector, particularly companies central to the artificial intelligence boom, has generated extraordinary returns over the past decade, significantly outpacing the S&P 500's 310% gain. Nvidia (NVDA) stands out as the primary beneficiary, with a 31,161% ten-year return fueled by its dominance in the GPU market. Its fiscal second-quarter results underscore this leadership, with revenue soaring 56% year-over-year to $46.7 billion, driven almost entirely by a 56% surge in its AI-centric data center business, which now constitutes 88% of total revenue. Competitor Advanced Micro Devices (AMD) also shows strong top-line growth with a 32% increase in Q2 revenue, but its performance reveals underlying vulnerabilities; data center revenue grew only 14%, a marked deceleration from the previous quarter, and adjusted EPS fell 30% year-over-year. This weakness is directly attributed to the impact of U.S. export controls to China, which led to an $800 million inventory charge, highlighting the material geopolitical risk in the semiconductor space. The broader AI ecosystem's health is confirmed by strong results from Arista Networks (ANET) and Broadcom (AVGO). Arista's 30% revenue growth reflects robust demand for high-performance networking, while Broadcom's AI-related revenue jumped 63% to $5.2 billion, signaling a strong parallel market for custom silicon and networking solutions. Axon Enterprise (AXON) demonstrates that high-growth opportunities exist beyond AI, with a 33% revenue increase and an 83% surge in adjusted net income, though its 84.0 forward P/E ratio points to the high valuation environment for top-performing tech stocks.

Key Decisions for Investors

• Given Nvidia's demonstrated market leadership and 56% revenue growth despite export controls, investors should weigh its premium valuation (39.5 P/E) against its projected 34.9% annualized EPS growth as the primary pure-play on AI compute.
• For investors evaluating AMD, its lower forward P/E of 27.1 compared to Nvidia must be balanced against significant geopolitical and execution risks, as evidenced by its recent 30% EPS decline and data center growth challenges stemming from U.S. sanctions.
• Consider diversifying AI-related investments beyond GPU manufacturers to include critical infrastructure providers like Arista Networks and Broadcom, which are capitalizing on the build-out of AI data centers with strong, double-digit growth in networking and custom chip segments.
• While historical returns are compelling, investors should note the elevated valuations across these top performers, particularly Axon's 84.0 P/E, and remain vigilant about the potential for future earnings to justify these multiples.