Despite Tuesday’s broadly positive lift, the markets remain a mess. The benchmark Dow Jones is down nearly 13% on a year-to-date basis, while the tech-centric Nasdaq is off almost 8%. With global panic over the coronavirus from China, it’s likely that we’ll see more turbulence ahead. Nevertheless, specific companies like Nvidia (NASDAQ:NVDA) have weathered the storm quite well. In fact, NVDA stock is up over 9%.
In any other circumstance, that’s a decent start considering that the first calendar quarter hasn’t yet flipped. Given the market turmoil, though, this is simply a remarkable performance. On the Tuesday session, NVDA stock jumped over 6%, poking its head above the 50-day moving average, which is a common barometer for nearer-term technical strength.
While the immediate fluctuations are difficult to predict, in my view, NVDA stock offers a win-win scenario. Should shares hold up, this dynamic obviously bolsters your portfolio during an incredibly stressful environment. If Nvidia encounters turbulence, it’s a clear opportunity to pick up its equity on the cheap.
How can I be so confident amid such negative news? To fight the coronavirus, Italy’s government locked down their entire nation. Back home, the case number is already at the four-digit mark.
As I’ve consistently mentioned, diseases do not dictate long-term trajectories in the markets. Don’t read this wrong: I’m not discounting the seriousness of this outbreak. However, it’s important to realize that panic and irrational behaviors do not help mitigate your circumstances; indeed, it might make things worse.
What does move markets, though, are megatrends – transformative events that will reshape societies and economies. And the reason why I’m so bullish on NVDA stock is that it impacts several key markets.
Core GPU Market a Growing Catalyst for NVDA Stock
Back when I was a kid, video games were huge … for kids. At the time, companies like Nintendo (OTCMKTS:NTDOY) and Sony (NYSE:SNE) delivered their early-generation consoles for the near-exclusive benefit of hobbyists. Few could have predicted that the gaming industry would have blown up the way it did.
Fewer still could have realized the generational impact that video games would carry forward. Younger members of Generation X and older millennials essentially had their minds forged by the gaming industry. As you may know, video game nostalgia is a powerful psychological phenomenon, driving the surge in old school gaming platforms.
Granted, this specific element doesn’t directly support NVDA stock. After all, Nvidia is world renowned for their graphics processing units (GPUs) which power the advanced capabilities of modern games. Nowadays, it takes hardly any processing power to play a retro Nintendo game.
However, the key takeaway is that unlike other juvenile pursuits, video game playing has stuck with kids growing into adulthood. As various studies have shown, the age breakdown of gamers is more diverse than ever. Further, among paying gamers, the gender disparity is tightening as demographics get younger.
Now that is a megatrend worth paying attention to, especially if you’re long NVDA stock like I am! What these trends signify is that over the next several years, demand for advanced video game equipment will only rise. And within the next 10 to 20 years, the upside is likely massive.
How so? It involves a burgeoning development called eSports. This is exactly how it sounds: professional sporting leagues where the platform is video games instead of traditional athletic events. It’s large enough to attract millions of advertising dollars and it will only grow more relevant.
Pay Attention to Demographics
But it’s not just eSports as a gaming outlet that makes me want to double down on NVDA stock. Rather, I’m very optimistic on the influence that the coming Generation Z will have on gaming trends.
This is the first generation who have grown up in the digitalization era. Prior to this generation, people have largely incorporated “analog” methods to conduct commerce and consume products and services. In other words, members of Gen Z consider shopping on Amazon (NASDAQ:AMZN) and streaming content on Netflix (NASDAQ:NFLX) second nature.
For them, video games – and less traditional sports – represent influential factors. I don’t think it’s any coincidence that attendance at professional sports is declining significantly. Simply, the emerging generation don’t place as much influence on analog, well, anything.
Logically, this doesn’t favor popular sports brands like the NFL or NBA. However, for NVDA stock, it’s a legitimate gamechanger.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
