Nvidia Stock (NVDA): Is It A Good Buy?

Last Updated March 10th 2022
5 Min Read

Nvidia is at the forefront in the GPU segment, dominating the market and providing GPUs for gaming laptops. However, GPUs have seen their role evolve in recent years, and they are no longer the humble chip that powers laptops. In 2022, Nvidia is set to expand into the Metaverse, cloud gaming, crypto, and self-driving cars space. The company has also promised to significantly improve its supply chain this year. Let’s see what factors make NVDA a good buy in 2022. 

Key Points 

  • Nvidia has been on a fairly impressive run, with a promising FQ4 report card. The gaming and data sectors will be crucial drivers for the chip-making giant. 
  • The Metaverse is a new and rapidly evolving opportunity for Nvidia, with significant growth potential. 
  • Although trading at a lower valuation than what it did in 2021, promising growth figures indicate that Nvidia could be a good long-term investment. 

A Brief Overview Of Nvidia (NVDA) 

With new opportunities fast emerging, now would be a good time to buy Nvidia    

Nvidia is the leader in media and communication devices, and graphics processors, with an 83% share in the GPU market. Nvidia’s product line covers almost every platform, including desktops, laptops, high-end gaming laptops, gaming consoles, workstations, mobiles, and more. After pioneering the modern GPU, Nvidia is set to expand into other avenues. The company now has its sights set on the Metaverse, self-driving cars, cloud gaming, and more. 

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2022 Set To See More Growth From The Chipmaker 

Nvidia’s potential as a top stock in today’s market is soaring, with strong growth predicted in 2022

Nvidia (NVDA) had hit an all-time high of $346.47 back in November, with the stock price currently trading lower than those levels. However, looking at the bigger picture, NVDA is returned around 82%. While the price has slumped in recent months, currently at $230, there remains a significant potential for an upswing, with the chip-making giant moving into disruptive technologies such as AI, robotics, the Metaverse, and other fields, all of which could become significant revenue drivers. This makes NVDA one of the top stocks to invest in now. 

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Record Q3 Earnings 

Nvidia’s surging earnings, which are set to grow further, is an excellent reason why you should invest in NVDA. 

In Q3, results announced by Nvidia recorded a revenue of $7.10 billion, a figure up 50% from a year earlier. Data Center revenues shot up over 55% from the year prior, settling at $2.94 billion, while gaming revenue climbed to $3.22 billion, up 42% from the previous year. The earnings tell a largely successful story, with Nvidia successfully cornering more market share in the data server space. Nvidia’s graphic processors were also in high demand, with enterprises and cloud providers shoring up demand. 

Tightening Its Grip On The Gaming And Data Center Segments 

Nvidia’s dominance of the gaming and data center segments is only going to grow. 

Another reason why Nvidia is an excellent long-term investment is its dominance in the gaming, and now, data center segments. The chip maker’s staggering growth can be attributed to a huge surge in demand for the company’s graphic cards and AI processors in the data center and gaming industries. As mentioned earlier, Nvidia dominates the GPU market, controlling over 80%. Gaming laptops powered by the company’s GeForce RTX are finding new use cases apart from just gaming, with new avenues opening up in esports, digital content, streaming, and more. 

Furthermore, the company estimates that so far, only 1/4th of its installed base has adopted the newer RTX GPUs, meaning there is a significant opportunity for revenue as users upgrade their legacy GTX to RTX. These factors are set to contribute to a significant uptick in price and could act as an effective means to increase the investability quotient of NVDA, making it a good long-term investment. 

Opportunities In The Metaverse 

The Metaverse is being touted as the next big growth driver for Nvidia and could make NVDA a good buy now.

Nvidia is set to establish itself in the fledgling metaverse space, with estimates stating that the Metaverse could transform into a $10-$30 trillion market within a decade. Nvidia’s GPU chips, data center CPUs, and the next generation Bluefield data processing unit are set to play a significant role in fulfilling the hardware requirements required to support the metaverse space. Coupled with hardware, Nvidia has also created a software platform, Omniverse, that allows designers to collaborate virtually and develop simulations of real-time objects. With the company set to play such a pivotal role in the space and establish itself, NVDA makes for an excellent investment opportunity in 2022. 

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Is Nvidia Stock A Good Buy? 

Twenty-one out of 38 analysts on Yahoo Finance rate NVDA a buy or strong buy. According to experts. Nvidia stock represents a good buying opportunity following a selloff that has left its shares down 24% year to date.

With the company’s earnings and sales set to grow consistently, Nvidia is one of the top stocks to buy in 2022. 

Nvidia is expanding into several new avenues, with new opportunities set to drive the demand for its chips even higher. With the management promising to improve supplies, 2022 looks bullish for the giant chip-making.

While NVDA has seen a fall at the start of the year after reaching its all-time high towards the end of 2021, the drop can be attributed to short-term profit-taking, which is expected after a surge. While there could be some volatility in the short term, the drop in the price of NVDA could signal a buying opportunity for long-term investors. 

Barring any sudden shocks, Nvidia has several factors going for it, and with its price currently lower than its all-time high, the NVDA stock could possibly be a good buy for 2022. 

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