It has been an incredible few years for chipmaker Nvidia (NASDAQ: NVDA). Not only have sales grown exponentially, but Nvidia stock has boomed. Over five years, the share price has grown by 2,186%. Wow!

Even after a recent fall (the stock has tumbled 16% in the past month alone), the price-to-earnings ratio is 40. That is not cheap, but it has got closer to a valuation where I would be willing to invest.

I am still concerned that the price does not factor in risks fully, like a potential slowdown in demand for pricey AI chips once the initial sales boom fizzles out, or a competitor bringing down costs dramatically.

But am I looking at this from the wrong perspective? Might Nvidia stock, even after its stellar recent performance, still be a generational bargain?

It might just be getting started

That may sound like a weird way to look at things.

But consider Amazon (NASDAQ: AMZN) 25 years ago.

The Internet was the exciting tech investment theme of the day, just as AI has been over the past several years.

Amazon’s business was growing quickly. While there were plenty of rivals (as there still are), Amazon already stood out just as Nvidia does in its field today. Both had substantial and fast-growing sales, a large customer base and proprietary technology.

In 1997, Amazon was trading for 7c a share. By late 1999, it had surged over 6,700% and traded at $4.70.

Then what happened? By late September 2001, it was down to 30c a share. Since that point, it has risen over 65,000%! Yes, 65,000%!

I think Nvidia now looks a bit like Amazon in late 1999. An initial surge of investor enthusiasm has pushed Nvidia stock up to what seems like a very high level by its historical standards. Now it is falling back.

The long-term potential remains massive

Historical performance does not tell us what a stock may do in future.

But we do know that, from here, Nvidia stock will ultimately go up, down or sideways.

Amazon went up (by a long, long way) because it was able to convert an early advantage in a market with massive potential into a long-term one thanks to its business model, customer base and points of differentiation compared to rivals.

I reckon Nvidia may ultimately be able to do the same.

I mentioned some of the risks above, but it also has a lot of advantages. Like Amazon’s market, chip-making is a sector where success can breed success thanks to economies of scale, installed user bases and unique technological know how.

The risks still concern me and, for now, I am holding off investing. Just because Nvidia reminds me of Amazon in 1999 does not mean I can shed my normal approach to risk and reward out of the window.

However, the valuation is getting close to a point where I would be willing to add Nvidia stock to my portfolio. I will keep watching the business and its share price closely.