After a disappointing start to 2022 — like so many stocks have experienced — Nvidia (NASDAQ:NVDA) shares had a gangbuster week. Although NVDA stock remains down over 12% since the start of 2022, it has had an impressive run last week, with 19% growth. It’s not earnings, a new graphics card or demand for GPUs to power crypto miners behind this move. The catalyst appears to be the metaverse. More specifically, a report by a Cowen analyst that the Omniverse could power Nvidia to $140 billion in annual sales and annual earnings-per-share of $28 by 2030.
Is it time to get onboard the Nvidia stock train?
From my perspective, there are many reasons to get behind NVDA, especially for investors looking to build a strong, long-term growth portfolio. Gaming, data centers, crypto mining, AI, autonomous vehicles — they all offer significant growth potential for this company.
However, since the catalyst behind this week’s big movement is the metaverse, let’s do a deep dive on that topic. What is the metaverse, exactly, and why do analysts feel Nvidia is in such a strong position to benefit from it?
Cowen Analyst Comments on Nvidia’s Metaverse Potential
Before getting into the details of the metaverse, here’s a quick recap of what kicked all this off. At the start of the week, Cowen analyst Matthew Ramsay released a research note highlighting Nvidia’s opportunity to cash in on the metaverse. As reported in The Motley Fool, Ramsay estimated that Nvidia’s sales tied to the metaverse could reach $10 billion by 2030. According to Ramsay’s projections, when you add that metaverse revenue into the expected growth of Nvidia’s existing market segments, the company could reach $140 billion in annual sales by 2040.
When you consider that Nvidia’s revenue for fiscal 2022 was $26.91 billion, you’ll understand why NVDA stock spiked this week.
What Is the Metaverse?
The term “metaverse” has been thrown around a lot over the past year or two. Despite what some companies might want you to believe, it’s not a single thing or platform. It’s more of shift toward interacting digitally instead of purely physically. This can include virtual reality (VR), or a mix between digital and physical in the form of augmented reality (AR). There will be dedicated spaces such as games and virtual worlds, and a digital economy is springing up to serve these communities.
The metaverse will not be a single virtual world, and it won’t necessarily be purely digital. It’s already here in some respects, with various online gaming communities. But we are quickly moving toward a future where the metaverse is much more important than it is now. Think of the metaverse today as the early days of the internet to get a visualization of how it is primed to explode in capabilities and importance.
Where Is Nvidia’s $10 Billion Opportunity in the Metaverse?
It’s not an exaggeration to say that Nvidia’s technology is critical to the metaverse as it exists today, and for its future development. The metaverse requires massive server infrastructure to host virtual worlds. Nvidia has leveraged the parallel processing capabilities of its GPUs to become a leader in GPU-accelerated data center solutions. The company’s data center revenue was up 71% in its latest quarter; a portent of its growing importance.
AI will be in high demand for an interactive metaverse experience — another area where Nvidia is a leader. Making the most of a PC-based metaverse will require consumers to equip their setups with high-powered graphics cards. The creators who design metaverse experiences and populate them with virtual goods will also need high-powered GPUs and software tools. Nvidia is all over this, and launched its own Omniverse — a “real-time 3D design collaboration and virtual world simulation platform” — earlier this year.
I can’t really think of another company so perfectly positioned to reap the rewards of the metaverse. That spells continued growth momentum for NVDA stock.
Bottom Line on NVDA Stock
The last time I wrote about Nvidia was several weeks ago. The company’s stock had been bruised by the news it had been hacked and I felt that its weakness made it a real buying opportunity.
I still believe that to be the case, even though shares are now considerably pricier. This Portfolio Grader “A” rated stock has delivered a truly amazing 884% return over the past five years. Despite being down 21% from its November, 2021 all-time high close! The metaverse is showing all the signs of providing the demand that will keep that growth trajectory going.
On the date of publication, Louis Navellier had long positions 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.