Having delivered stellar returns to investors in the past, Nvidia Corporation (NASDAQ:NVDA) has established itself as one of the top tech companies in the industry. The leading manufacturer of chips has reported strong revenue and growth quarter after quarter and is enjoying the glory in the gaming and data center market. After the stock split, NVDA stock has been consistently hitting new highs. It is currently trading for $222.
I am very bullish on NVDA stock and believe it will continue to soar. I think it is one of the top growth stocks to add to your portfolio. Let’s dig deeper into my bullish thesis for NVDA stock.
The Massive Potential Of ARM Deal
Investors have been hearing a lot about the famous ARM deal for the past year. Nvidia’s planned $40 billion acquisition of ARM has hit a few hurdles after UK regulators found that it can damage competition and also weaken rivals. This is taking a lot of time for the deal to be approved and it has entered into further investigation.
ARM supplies IP technologies to semiconductor suppliers and central processing units globally. The suppliers use the IP to build semiconductor chips for their products and applications.
The deal is yet to be approved and Britain’s competition regulator added to the pressure recently by stating that the merged entity will cut down on the competition in the market. The concerns related to ARM and Nvidia affect the entire business. This deal could also pose a threat to the innovation in industries that are the backbone of the economy.
It is hard to speculate on the result of the deal but if the merger is completed, the merged identity could become one of the biggest players in the industry. The deadline for the deal is September 2022.
Once the deal is approved, there is no stopping the domination of Nvidia globally. The company could become one of the topmost suppliers of chips and it will be able to expand its market share. Even if the takeover is allowed to pass with certain undertakings, it will be beneficial for Nvidia. It will take NVDA stock to new peaks and will establish Nvidia’s authority in the industry.
Strong Businesses Poised For Growth
If you are looking for one reason to bet on NVDA stock, it is the gaming business. The company has set a gold standard in the chips and the gaming business contributes more than 40% to the total revenue of the company. There is a massive demand for Nvidia’s graphics processing units and it sometimes outpaces supply.
Interestingly, there is a rise in the number of gamers in the population and this is working as a tailwind for the business. With the lockdown and remote work, there was a surge in the demand for GPUs. Nvidia will benefit from the massive growth of the PC gaming market and its sales and revenue numbers will reflect the same. The success of the gaming sector is expected to continue for the next few years and it will take NVDA stock to new highs.
The Bottom Line On NVDA Stock
Besides the gaming sector, Nvidia has also found success in AI, data center, and automotive businesses. Nvidia’s supremacy cannot be challenged and it is here to stay and will continue to enjoy a stronghold in the industry. Its dominant position will help sustain growth and hit new revenue numbers.
When it comes to innovation and technology, Nvidia is a leader and there is no stopping its growth. The company continues to prove its strength quarter after quarter.
Fundamentally, Nvidia is a healthy company with the potential to generate higher returns in the long term.
NVDA stock is a must-own in 2021.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.