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Nvidia Corporation (NVDA) Stock: Your Time Is Running Out

I'm long NVDA stock and believe in this company, but the time to buy in at 'reasonable' prices is nearing an end


Nvidia Corporation (NASDAQ:NVDA) was a niche player in its early days, focusing on graphic processing units (GPUs), or graphics cards. That was way back when, before several NVDA stock splits.

Nvidia Corporation (NVDA) Stock: Your Time Is Running Out
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In the early days, there were big players like Intel Corporation (NASDAQ:INTC), Advanced Micro Devices, Inc. (NASDAQ:AMD) and Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) that all made chip sets for GPUs. And they still do.

But Nvidia made really high-end GPUs. Gamers loved them. Research labs and universities loved them. NVDA carved out a solid business but was never given much attention since it was a niche and no matter how many geeks bought its GPUs, it wasn’t going to be a major player by dominating that sector.

Nvidia then did what successful, out-of-the-box companies do. It looked out years in the future and decided to set a course to a new industry — visual computing.

It bet that as computers got faster and broadband delivered more information faster, that visual computing would become a major part of computing for decades to come. And NVDA was right.

Now, the market cap for NVDA stock is bigger than all but the biggest players in the market — INTC and Texas Instruments Incorporated (NASDAQ:TXN). Because its tech is so advanced, it also has partnered with a number of companies to add their components into devices and machines built for others. It’s like car companies that feature a premium sound system or designer interior.

It now looks like NVDA’s newest GPU is now on track to steal AMD’s GPU’s lunch. Also, its GPUs were selected to be in the newest Nintendo Co., Ltd. (ADR) (OTCMKTS:NTDOY) gaming devices. And both of these come on the heels of a very bullish Q4 and full year earnings report for NVDA.

Oddly enough, the stock sold off on the release, which is certainly a “buy the rumor, sell the news” kind of thing, because there was no reason for the selloff. And even after the selloff, NVDA stock is up 212% in the past 12 months.

What’s more, the stock has already crossed back over the psychologically important $100-a-share mark.

This recent performance indicates that traders sold the news, took some profits and are now back in for the next leg up.

I wrote about NVDA last month after its fall from its lofty heights around $120 per share, and now it looks like the momentum is now behind the stock again, as predicted.

Don’t let its price-to-earnings ratio of 41 deter you. Nvidia’s growth almost makes that a reasonable valuation, and even if it’s slightly expensive, it’s less of a premium than you see on many stocks with a lot less growth potential.

With a market leading position in the biggest trends in computing — big data, virtual reality, augmented reality, internet of things, smart cars and other devices — NVDA is in the catbird seat. It’s still not too late to get in while its still consolidating.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

Article printed from InvestorPlace Media,

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