Nvidia (NASDAQ:NVDA) stock has had quite tough go in 2018. By the end of the year it was off more than 40%. But don’t shed too many tears for long-term investors in the leading graphics chipmaker — in the past three years, the stock has managed to eke out a mere 340%.
This is one thing you need to bear in mind with the markets — perspective. What may have been a horrible year (relatively speaking) is the exception to the rule. Usually, NVDA stock is knocking it out of the park.
Yes, if you got into the stock last year you may not be too happy right now. But there’s little to worry about when it comes to NVDA. It is a company that is riding so many long-term trends and continues to be at the forefront of the industry, that even when setbacks occur, they’ll surrounded by years of significant success.
NVDA Stock Still Stands Strong
And what happened in 2018 wasn’t all about NVDA. It was the entire tech sector and most chipmakers in particular.
Most of the issues were about trade wars and tariffs, especially for goods that had chips in them. And in today’s world, most products have chips in them of one sort or another.
Yet Nvidia doesn’t sell low-end mass market components. It rules the high end of the graphics processing unit (GPU) market.
Its GeForce GPU is for gamers. Its Quadro GPU is for designers. Its Tesla and DGX units are for AI data scientists and big data developers. And its GRID is for cloud-based visual computing customers. In its Tegra processor division, it fits an entire computer on one chip and powers sectors like computing for robots, drones, self-driving cars as well as gaming.
The GeForce was also in high demand in 2017 as the hot GPU for bitcoin miners. This powered sales into 2018, until the bottom fell out of cryptocurrencies. NVDA stock, while benefiting mightily for the unplanned demand, also got punished far more than it deserved when cryptocurrencies tanked. It was a windfall when it happened, but it was a significant part of Nvidia’s future.
However once that sector cooled, analysts, already freaking out over the anticipated swoon of other chipmakers and tech stocks, just lumped NVDA in with the rest.
But if you go back to the descriptions of the sectors that Nvidia is a leader in — gaming, cloud computing, big data, AI, robots, “smart” vehicles and buildings — it is well placed for the future. And this doesn’t even touch NVDA’s potential growth in virtual reality and augmented reality markets, which will benefit mightily from its GPUs.
Now, that’s not to say the road is clear. There are plenty of bumps and hairpin turns to navigate between now and the end of 2019. But the fact is, NVDA is a long-term winner and now it’s on sale. Patient long-term investors will be very well rewarded.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, 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, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.