It’s been an amazing few years Nvidia (NASDAQ: NVDA). Nvidia’s stock has skyrocketed over the past five years 1217%.

This is the type of return that many investors dream of – but only a few can achieve.

Many people, including myself, missed out on Nvidia’s skyrocketing stock price.

But all is not lost – I think, analyzing Why this has done as well as it can aid as I scan the market for potential growth stars in the future.

1. Investors love a consistent story

While some companies have promising technology, the path to commercialization can be tardy and inconsistent. I think there are some UK renewable energy companies that illustrate this point painfully well.

When people invest in what they see as an electrifying growth story, they like to see growth. Many Also I like to see consistency.

Something Nvidia has done brilliantly is meet or exceed investor expectations quarter after quarter and year after year.

The company delivered the goods, not excuses, explaining why sales were slower than expected or why technology was not advancing as quickly as expected.

One mistake I think many investors make when evaluating technology stocks is falling in love with technology. However, to do well in the long run, a company usually needs not only the technology but also the commercial skills to bring it to market and make money from it.

Showing the investing community that the company is getting bigger and more profitable, rather than hitting repeated bumps, helps explain why some tech stocks are doing well – including Nvidia.

2. Show me the money!

Of course, just being consistent isn’t enough (though it helps). Ultimately, even patient tech investors want to know that the company will be able to generate significant profits.

One way to do this is to actually generate profits. Indeed, Nvidia’s rising stock prices partly reflect its enormous profitability.

But even if a company continues to spill red ink, the investment case is usually stronger if it can at least demonstrate a credible path to profits. This includes everything from targeting a vast enough market of users to having the right level of pricing power.

Nvidia’s market was vast even before the artificial intelligence boom, which greatly increased demand for chips. Thanks to its original designs, it also has pricing power.

If the chip market remains vast, that could mean Nvidia’s profits will grow over time. This could cause Nvidia’s stock to rise from today’s levels.

3. Never forget the basics

Still, I have no plans to add Nvidia to my portfolio for now.

While I think it’s a great business, the share price seems too high to me given risks such as a potential slowdown in demand after the initial boom in AI installations and the potential impact of export controls on sales in some markets.

When technology stocks have been on fire for years, it can be tempting to buy them based on momentum. However, I consider this a speculation, not an investment.

No matter how well stocks like Nvidia do, I Always Consider whether the current price seems to offer good value to the company’s potential customers.