Is Now the Time to Nab Some NVDA Stock? Yes! Here’s Why.

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NVDA stock - Is Now the Time to Nab Some NVDA Stock? Yes! Here’s Why.

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Down 18% year-to-date (YTD), now is a great time to buy shares of semiconductor giant Nvidia (NASDAQ:NVDA).

With its market leading position, strong earnings and future growth opportunities, investors should view the current pullback in NVDA stock as a buying opportunity. Currently trading at $240.50 a share, down over 30% from its 52-week high of $346.47, Nvidia’s stock looks to be on sale right now and is one of the best technology companies that investors can buy for the long-term.

In recent notes to clients, Bank of America (NYSE:BAC) and Citigroup (NYSE:C) each recommended Nvidia as a top semiconductor stock. Bank of America sees Nvidia achieving massive growth from semiconductor chip sales tied to cloud computing and artificial intelligence, while Citibank said it sees several catalysts for NVDA stock this year, including the holiday gaming season and demand for data center chips. Among 40 analysts who cover Nvidia, the average price target on the stock is currently $344.27 a share, implying 43% upside.

In mid-February, Nvidia reported another in a string of exceptionally strong earnings reports. The Santa Clara, California-based company announced fourth-quarter earnings per share of $1.32, which was 69% higher than a year earlier and beat the $1.22 that was expected by analysts. Nvidia also reported revenue for Q4 of $7.64 billion, up 53% year-over-year and higher than the $7.42 billion expected on the street. The company attributed the strong earnings to continued demand for its semiconductor chips and the easing of global supply constraints.

Equally impressive was the forward guidance Nvidia provided. The company forecast revenue of $8.1 billion in the first quarter that just ended, which was higher than analyst expectations of $7.29 billion. Nvidia CEO Jensen Huang said in a statement that Nvidia’s supply constraints continue to ease and the company’s supply of products should increase “substantially” in the second half of this year.

If there is one blemish on Nvidia, it is that the company was forced to abandon its planned $40 billion acquisition of British chipmaker Arm Ltd. after competition regulators around the world balked at the tie-up. However, even without the Arm deal, Nvidia does not look to have missed a beat. The company continues to grow at a fast but sustainable clip, and demand for its products is only increasing as technology sectors such as cloud computing and artificial intelligence grow and mature. Demand also remains strong for the graphics processing units that Nvidia makes and are used in video game consoles. The company’s chips are even used by cryptocurrency miners.

The current downturn in Nvidia’s stock is due largely to the broader retrenchment in tech names and has nothing to do with the company’s performance. The underlying fundamentals at Nvidia remain rock solid and the share price should recover in time and test new highs. As such, investors should act now and buy NVDA stock. The shares are not likely to remain on sale long.

On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/is-now-the-time-to-nab-some-nvda-stock-yes-heres-why/.

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