For Nvidia (NASDAQ:NVDA) bulls, the last few months have been nothing short of horrific. Up until the beginning of October last year, shareholders had every reason to smile. At that time, Nvidia stock had gained 48% for 2018. This was a massive haul, considering that NVDA had already enjoyed consecutive years of outstanding performances.

But once the final quarter of 2018 began in earnest, the narrative fell apart. The tech firm posted deeply disappointing results for its third-quarter fiscal 2018 earnings report. Although the printed miss wasn’t too terrible, disastrous Q4 guidance and excess channel inventory due to the cryptocurrency meltdown gutted NVDA stock.

Obviously, the semiconductor firm — which specializes in graphics processing units (GPUs) and a host of tech-heavy applications — needed a big win for Q4. It delivered. Against a consensus earnings-per-share target of 75 cents, NVDA posted 80 cents, or a 7% positive surprise.

But the real winner was found in the revenue department. The company brought in $2.21 billion, beating the Wall Street consensus by $10 million. Although a small percentage increase over the forecast, the sales haul demonstrated that NVDA is on the path to recovery. Following the report, Nvidia stock skyrocketed 8% in extended trading.

This is exactly what embattled shareholders sought after months of painful disappointments. Just prior to the Q4 disclosure, NVDA stock was up over 18% for the year. Now, the bulls can add to the momentum, solidifying the comeback narrative.

However, Nvidia stock also suffers from a credibility problem. For one thing, its competitors have fared better during the semiconductor storm. Principal rival Advanced Micro Devices (NASDAQ:AMD) has gained over 28% this year. And Intel (NASDAQ:INTC) didn’t lose anything during the October market meltdown — it’s up over 11% year-to-date.

Wall Street Is Overly Bearish on Nvidia Stock

Drilling into the details doesn’t help ease investor concerns about NVDA stock. The gaming sector, which represents Nvidia’s core identity, brought home $954 million in sales. At first glance, it appears an impressive number until you realize that consensus called for $1.21 billion.

Another worrisome issue for Nvidia stock is the underlying company’s data center business. Over the years, management has aggressively competed in this lucrative industry of tomorrow. But the Q4 revenue picture didn’t justify that investment: against an $839 million consensus target, the tech firm fell way short at $679 million.

These segments weren’t the only misses. Its “Professional Visualization” department generated $293 million versus a $314 million forecast. More critically, its “Automotive” segment — a potentially pivotal growth market — generated $163 million, missing consensus by 10%.

No investor, especially buy-and-hold types, should ignore these warning signs. But I think a temptation currently exists to conflate these shortfalls with Nvidia’s supposed fundamental weaknesses. In reality, Nvidia stock probably hit what Argus analyst Jim Kelleher termed a “near-perfect storm.”

For instance, the video game industry broadly suffered steep declines, correlating with volatility in NVDA stock. Nevertheless, experts predict that the number of active worldwide PC gamers will increase by more than 3% annually over the next three years.

Unlike most console gamers, PC gamers are extremely dedicated to their craft. They’ll shell out big bucks for dedicated gaming rigs to create a seamless, latency-free experience. Therefore, we’ll likely witness an increase in GPU sales, particularly for the premium brands in which Nvidia specializes.

And while excess inventory remains challenging, the markets have priced Nvidia stock as if management will never find a solution. I don’t think this is an accurate assessment. Moreover, if they resolve the issue, it clears the way for Nvidia’s next-generation chips to flourish.

Watch the Technical Risk to NVDA stock

Fundamentally, I view Nvidia stock as a long-term contrarian play. The tech industry typically operates in cycles. Once the bad news is priced in, we usually see a response to the upside.

Further, none of the fundamental drivers for NVDA stock have disappeared. If anything, they’re getting stronger. Aside from gaming, demand for driverless technologies has rapidly gained steam. While that department suffered a slip up, I can’t imagine Nvidia will be down for long.

At its current setup, shares have formed a bearish pennant. Enthusiasm over its Q4 earnings result has temporarily broken this pattern’s implications. But if future trading fails to drive average levels higher, watch out! We could see another jaw-dropping decline.

My take? If you have a patient mindset, take a measured shot. The company has delivered a meaningful performance in Q4. Once the inventory issues have faded, Nvidia will enjoy its burst of second wind.

Just make sure to keep the powder keg dry. We’re still navigating choppy waters. Under these circumstances, no one can call a bottom with certainty.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.