Because of the coronavirus from China, some fund managers are pulling out of stocks. They’re taking profits after multiple years of gains in well-known tech names. Case in point? Look at Nvidia (NASDAQ:NVDA) stock, which has been pulled down along with most other companies listed on the Nasdaq Composite lately.
It’s perfectly reasonable to stay abreast of the latest developments in the viral outbreak. However, there’s no need to panic sell your shares of Nvidia. If anything, this could be a prime opportunity to average down at lower prices.
Dealing With the Outbreak
The impact of the coronavirus is real and must be taken into consideration. This is true no matter what you’re investing in. Nvidia has felt the impact and will continue to do so. No one can really predict the course of the virus’s spread or how far the Nasdaq will fall.
Even beyond the share price, there are ripple effects. For instance, Nvidia cited coronavirus-related concerns when it canceled the portion of its upcoming annual user conference that would have been in-person. The company plans to deliver the entire conference online. Chief Executive Jensen Huang’s planned keynote address will be delivered through a livestream.
Could disruptions like this continue as the story of the coronavirus unfolds? Firsthand Technology Opportunities Fund’s Kevin Landis has a sensible perspective on the situation. He has managed money through challenging situations before. And he has seen how market freak-outs tend to progress.
Landis observes, “When a panic really gets going, it can be more of an enthusiastic panic than you expected.”
Knowing this is what allows investors to remain calm during market panics. From a long-term perspective, Landis seems relaxed and bullish on Nvidia shares. He says, “Two years from now Nvidia will still be here, and it will still be a great stock.”
Maintaining Perspective
In other words, long-term investors need not succumb to short-term temptations. If you like the company, there’s nothing wrong with keeping your long-term perspective intact. This attitude has served Warren Buffett well for many years.
As Landis points out, future gaming innovations could drive growth for Nvidia. This could be the case regardless of the course of the coronavirus. Nvidia excels in developing powerful, sophisticated, high-performance gaming chips and graphics cards. In fact, Landis predicts that the company “will crush it if virtual reality becomes a real market.”
If the company’s fourth-quarter results are any indication, it is already “crushing it” financially. Executive Vice President and CFO Colette M. Kress stressed how impressive Nvidia’s revenues were in the fourth quarter:
“Q4 revenue was $3.11 billion, up 41% year-on-year and up 3% sequentially, well above our outlook, reflecting upside in our data center and gaming businesses … [Gaming revenue] of $1.49 billion was up 56% year-on-year…”
The impact of the coronavirus is likely to impact the next earnings report. It might even impact the next several reports. That’s okay because much of the virus shock has already been priced in. And as long as gaming is still popular, investors can count on Nvidia to push forward with innovative products.
The Takeaway on NVDA Stock
Innovators tend to outperform on a long-term basis. NVDA stock represents a position in one of tech’s most innovative companies. The coronavirus will be a factor. However, the big picture seems to indicate a company that can withstand the virus’s impact.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, he did not hold a position in any of the aforementioned securities.
