Editor’s note: This column is part of InvestorPlace.com’s Best Stocks for 2022 contest. The Reader’s Choice pick for the contest is Nvidia (NASDAQ:NVDA) stock.
Every year, the InvestorPlace Best Stocks contest pits some of our top analysts and writers against each other with one simple question: Who can pick the stock with the best return for the next year? Each year, we also invite you, the reader, to submit your pick, and this year, you overwhelmingly picked Nvidia (NASDAQ:NVDA) as the best stock for 2022. Up 128% year-to-date, it’s been a great year for NVDA stock already. But can it keep up its incredible performance next year?
This year, we invited you to share your reasons for your picks. We’ll be updating you throughout the year on how NVDA stock and all the stocks in the Best Stocks contest are doing, but for now, let’s talk about why NVDA stock is an interesting choice for 2022.
We’ll cover some of the trends in your responses and what that tells us about NVDA stock, and then we’ll get into what the future may hold for Nvidia.
What Do Readers Love for 2022?
You all picked a diverse set of stocks, and it would be impossible to talk about them all, but one thing is clear: InvestorPlace readers love big tech. Names like Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) popped up all over the place in the results.
There were a couple of other interesting trends too, though. Many people thought Tesla (NASDAQ:TSLA), Ford (NYSE:F) or Lucid (NASDAQ:LCID) would be 2022’s best stock — clearly, electric cars are on people’s minds, and for good reason. Matterport (NASDAQ:MTTR) got some attention from voters interested in the metaverse. What’s interesting about both of these trends is that Nvidia will benefit from growth in both of those areas.
Tesla, Ford, Lucid and many other automakers have been pushing not just for electrification but for self-driving cars. The Nvidia Drive platform aims to provide the hardware and software to make this dream a reality. Over the years, self-driving car technology has proven more elusive than first thought — Uber (NYSE:UBER) gave up on them at the end of 2020. But if 2022 changes that, Nvidia plans on grabbing a piece of the pie.
Moreover, increased excitement for the metaverse would also be a tailwind for NVDA stock. Companies like Meta Platforms (NASDAQ:FB) (formerly Facebook) have faced criticism for hyping a metaverse experience that consists of “legless torsos [sitting] around a conference room.” Without the graphical fidelity to create impressive, engaging digital worlds, many people won’t be willing to make the jump to the metaverse. Naturally, that’s a big opportunity for Nvidia. The company’s graphics cards will be essential to getting folks onto the metaverse.
A Hat Trick for NVDA Stock
I mentioned earlier that NVDA stock has gained 128% in 2021. That’s actually more than what the stock gained in 2020. On Jan. 2, 2020, NVDA stock opened at $59.69. On the first trading day of 2021, the price had more than doubled to $131.04. On Dec. 21, it opened at $288.91, doubling again and not too far from the all-time high of $334.12.
That’s in spite of the chip shortage (expected to extend until early 2023) and supply chain disruptions (maybe slowing down next year) that have slowed down seemingly every business. Nvidia has made money hand over fist this year with revenue and earnings per share (EPS) beating expectations every quarter. Revenue has grown at least 50% for each of the last five quarters with sequential growth also consistently growing for both revenue and EPS.
A third year of NVDA stock doubling would require this growth to keep on going. It’s not easy for a stock to double in price in a year, and it’s even harder to do it twice. Of course, NVDA stock doesn’t necessarily need to double in price to be one of the best stocks to own in 2022, but it would certainly be a welcome event for anyone with Nvidia in their portfolio.
On the date of publication, Avril Ayers 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.
