Nvidia (NVDA -6.22%) has been one of the greatest growth stocks in recent history. Over the past decade, the chipmaker’s share price (adjusted for splits) soared by 28,610%. That would have turned a modest $1,000 investment into about $287,100.

That dazzling growth was initially driven by brisk sales of Nvidia’s graphics processing units (GPUs) for video games, as well as to support professional visualization software and cryptocurrency mining. But over the past few years, sales of high-end data center GPUs for processing artificial intelligence (AI) tasks have eclipsed its sales of chips for other uses and become the company’s primary growth engine.

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From fiscal 2014 to fiscal 2024 (which ended in January 2024), Nvidia’s revenue grew at a compound annual growth rate (CAGR) of 31% as its net income rose at a CAGR of 52%. From fiscal 2024 to fiscal 2027, analysts expect its revenue and net income to grow at CAGRs of 57% and 65%, respectively, as the AI market continues to expand.

Based on those rosy expectations, Nvidia’s stock still looks reasonably valued at 34 times forward earnings. But before you start a new position in this chipmaker, you should review these strategies which could help you maximize your long-term returns.

Understand Nvidia’s strengths and weaknesses

The bull thesis for Nvidia is easy to understand, but investors should recognize the longer-term challenges. Nvidia generated 88% of its revenue from its data center chips in its latest reported quarter, which makes it a pure bet on the secular growth of the AI market. If that expansion slows down, Nvidia’s sales growth could abruptly stall out.

Nvidia could also face more intense competition in that space. It accounted for 98% of all data center GPU shipments worldwide in 2023, according to TechInsights, but Advacned Micro Devices could gradually gain more ground with its lower-cost Instinct GPUs. Many of Nvidia’s top hyperscale data center customers — including Microsoft, Amazon, and Alphabet — are also developing their own AI accelerator chips.

Trade restrictions for AI chips could also throttle its growth. Nvidia’s sales of data center GPUs to China have already been curbed by export bans, and it could face antitrust charges as it continues to monopolize the high-end data center GPU market.

Use dollar-cost averaging to offset the volatility

Nvidia’s stock has already been volatile, and the challenges ahead — which could include some steep and protracted drawdowns — could shake out a lot of investors. To offset how such volatility might impact you over the long term, follow a strategy of dollar-cost averaging, which is the practice of buying set dollar amounts of a stock at regular intervals regardless of its trading price.

For example, you might commit to investing $1,000 in Nvidia on the first trading day of every month. If its shares are trading lower, that sum will buy more shares. If they’re trading higher, it will buy fewer shares. Over a stretch of multiple years, those incremental purchases will dilute your overall risk and even out your long-term returns. It’s a strategy that generally works well with more volatile investments.

Lock up your shares in an IRA

Many investors sold shares of Nvidia over the past decade, and looking back, many would likely feel they did so prematurely. Though it doubtless seemed prudent to them to take profits on an investment that had massively rallied, patiently sticking with Nvidia and doing nothing would have been the smarter move.

As Warren Buffett’s mentor Benjamin Graham once said, the “investor’s chief problem — and even his worst enemy — is likely to be himself.” So to prevent yourself from becoming your own worst enemy and selling your shares of Nvidia too early, you should lock them up in a traditional or Roth IRA. If you’re under the age of 50, you can contribute up to $7,000 per year into both types of IRAs, but you can’t withdraw those funds without incurring penalties and taxes before the age of 59 1/2.

While you can still buy and sell your shares of Nvidia within an IRA, the inability to withdraw those funds until you’re much older might prevent you from impulsively taking profits. So by contributing $7,000 per year to an IRA, using those funds to purchase shares of Nvidia on an annual basis, and not selling those shares until you can withdraw those funds without any penalties should keep you on a disciplined path of dollar-cost averaging while maximizing your long-term returns.

Don’t just set it and forget it

Investors should buy and hold Nvidia for the long term if they expect the company to maintain its lead in the booming AI hardware market. But they shouldn’t blindly stick with the stock and ignore its earnings reports and evolving market challenges. If the bull thesis for this chip giant is eventually disrupted, investors should still be ready to sell the stock to lock in their profits.