Nvidia (NASDAQ:NVDA) has been a lot of things. The company has been a big part of the PC and gaming industries. Its high-powered video cards have been critical to the rise of cryptocurrencies. Nvidia chips are found in data centers, a key component in the development of AI and machine learning. Nvidia’s custom silicon powers the most popular hand-held gaming console of this generation. The company’s DRIVE platforms are at the cutting edge of autonomous vehicle development. Through it all, NVDA stock has delivered a return of 881% over the past 5 years.
All of that may end up looking like small potatoes compared to the potential of the metaverse. While it’s still in the early stages, the metaverse is on track to be a multi-trillion dollar business.
Getting there — and keeping the metaverse running — is going to require a massive investment in advanced technology. The kind of tech that Nvidia is a leader in. NVDA stock is currently down 24% from its $333.76 all-time high close last November.
There is real opportunity for investors to get onboard before its next big growth stage kicks off.
Metaverse Is an Opportunity for Nvidia
However you look at the metaverse — a virtual reality construct of a social media company, or a growing number of digital worlds where people do everything from gaming to remote work and learning — there are two fundamental requirements. The first is internet connectivity, and the second is immense computer processing power.
With its leadership in parallel-processing GPUs and a growing data center presence ($2.94 billion in revenue in Q3 2021 alone for that division), Nvidia is perfectly positioned to profit from the metaverse. The company is going to be a key part of the metaverse’s infrastructure. It even has its own metaverse platform in Nvidia Omniverse, a project that spent 2021 in beta but officially launched at CES 2022.
There are projections that the metaverse could become a multi-trillion dollar opportunity. When you look at Nvidia’s potential slice of that pie, the case for NVDA stock growth continuing through this decade gets even stronger.
Bottom Line on NVDA Stock
Even mighty Nvidia is not immune to risk. The company has put measures in place to prevent a repeat of 2018’s crypto crash. That episode saw NVDA stock tank, losing nearly half its value in just six weeks. However, weakness in the crypto market could still hurt.
The metaverse could take longer than expected to ramp up. Nvidia could also see its critical position in the metaverse come under scrutiny. NYU law professor Winston Ma recently told CNBC that Chinese regulators may be planning to target the metaverse in 2022.
However, the great thing about Nvidia is that even if the metaverse stumbles along for a while and even if the crypto market cools in 2022, the company is still going gangbusters on key businesses of gaming and PC graphics cards. Its bet on the GeForce Now cloud gaming service is taking off, contributing valuable and ongoing subscription revenue to the hardware sales mix. Other lines of business like data center are seeing strong growth as AI adoption accelerates.
In other words, an investment in this Portfolio Grader “B”-rated stock could deliver big returns thanks to the metaverse. However, NVDA stock still has momentum and high potential for continued long-term growth even without that, thanks to its other lines of business.
It’s like insurance.
That’s why the investment analysts polled by the Wall Street Journal give NVDA a consensus “overweight” rating. That’s why their average 12-month price target offers 33% upside. And that’s why NVDA stock deserves a strong look, especially when you can buy shares at early November prices during this pullback.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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