3 Reasons Why Investors Should Be Considering Moving Into Nvidia Stock

Advertisement

There have been scant headlines of late related to Nvidia (NASDAQ:NVDA), which is probably a welcome relief for the chipmaker that has struggled for most of 2019.

3 Reasons Why Investors Should Be Considering Moving Into Nvidia Stock
Source: Hairem / Shutterstock.com

To be sure, 2018 was a great year for the company but NVDA stock began to fall as the fourth quarter kicked off. This only increased after SoftBank announced it was selling its entire stake in Nvidia. 

Then in 2019, all chipmaker stocks took a hit due to the ongoing trade war concerns between the U.S. and China. The Nvidia stock price is still down more than 28% from a year ago but things do seem to be looking up for the company. 

The company will likely continue to face challenges. But NVDA has several strong tailwinds that should propel it forward into its next phase of growth. Here are three areas that are going well for the company. 

NVDA’s Gaming Business is Going Strong

The majority of Nvidia’s revenue comes from the sales of its graphics processing units (GPUs). GPUs are used in a variety of industries, including competitive gaming. The company’s gaming business still accounts for about 52% of its total revenue.

Gaming sales have dropped in the past year but the demand from gamers is still strong. And gaming laptops are quickly becoming a growing trend. Sales of Nvidia’s Max-Q gaming laptops increased quite a bit over the past year. 

Nvidia Continues to Expand into Autonomous Vehicles

Nvidia also offers a product called Tegra, which is a chip that combines GPUs and central processing units (CPUs). Tegra can be used for online gaming, drones, AI, and autonomous vehicles.

Over the past several years, Nvidia has been slowing making headway into self-driving cars and trucks. It partnered with Uber (NASDAQ:UBER) in 2015 to launch pilot programs in select U.S. cities. The Tegra processor is currently used in all Tesla (NASDAQ:TSLA) vehicles. 

Tegra only accounts for a small share of the company’s revenue. But it provides an incredible opportunity for growth in the coming years. 

Machine Learning Business is Growing

The machine learning industry is poised to take off as many tech companies use GPUs to operate their  systems.

Nvidia’s technology allows networks to process data up to 20 times faster than their competitors, making it the preferred choice for companies like Facebook (NASDAQ:FB). The company’s GPUs allow these networks to learn new information within a few hours when it might take several weeks using rival technology.

The machine learning industry is expected to reach $57 billion by 2021. Nvidia still has a long way to go toward developing this side of its business but is laying the groundwork to become a major player in the coming years. 

Will NVDA Stock Price Rebound?

It looks like 2019 will be a rebuilding year for NVDA stock but growth opportunities are unmatched by other chipmakers. The company has only begun to make headway with machine learning and autonomous vehicles and its gaming business will likely continue to grow. 

The recent drop in the Nvidia stock price provides a great opportunity to invest in this long-term growth play.

As of this writing, Jamie Johnson has no positions in any securities mentioned.

Jamie Johnson is a personal finance freelance writer and has been writing for InvestorPlace since mid-2019. She writes for a number of other well-known financial sites, including Credit Karma, Quicken Loans, and Bankrate.


Article printed from InvestorPlace Media, https://investorplace.com/2019/07/reasons-you-should-invest-in-nvda/.

©2024 InvestorPlace Media, LLC