After a long slide that saw Nvidia (NASDAQ:NVDA) stock lose 44% of its value over the course of just two months, the company’s first quarter of fiscal year 2023 earnings stopped the bleeding. In fact, the Q1 numbers — which handily beat analyst expectations for both revenue and earnings — kicked off a rally for NVDA shares.
Nonetheless, that rally has lost steam several times, including last Friday, because not all news from the company was good. In particular, citing a “challenging macro environment” the company issued revenue guidance of $8.1 billion for the current quarter. That was a big miss compared to the $8.54 billion analysts were looking for. In addition, the company says it will slow down hiring and move to control expenses.
At this point, NVDA stock remains well off 2021 levels and is down 38% so far in 2022. That weakness and a desire to park their money in safer havens are seeing many investors take a pass on Nvidia. However, for those focused on a long-term growth investment, NVDA stock at current prices is a worthy portfolio addition.
The Major Catalyst for NVDA Stock
In its Q1 earnings announcement, Nvidia highlighted record quarterly revenue, including new quarterly records for the Data Center and gaming divisions. Considering the current conditions — inflation, continuing supply chain woes and shuttering of its Russian business — that performance was impressive. The earnings and revenue beats alone warranted the subsequent rally in NVDA’s stock price. In addition, during the quarter Nvidia returned $2.10 billion to shareholders through stock buybacks and dividends.
However, what makes this company especially interesting for growth investors is what’s coming in the pipeline. And Nvidia’s founder and CEO Jensen Huang primed the pump for that in a big way. He told investors:
“We are gearing up for the largest wave of new products in our history with new GPU, CPU, DPU and robotics processors ramping in the second half. Our new chips and systems will greatly advance AI, graphics, Omniverse, self-driving cars and robotics, as well as the many industries these technologies impact.”
Furthermore, don’t forget about my update from April showing the $1 trillion long-term addressable market for Nvidia products. These new products are all about capturing as much of that market as possible.
Analysts Like NVDA Stock
Overall, Nvidia is pumped up about emerging technology like the metaverse and self-driving cars. Investment analysts are too, and they are largely bullish about how these areas are going to drive NVDA stock growth.
For example, last week, InvestorPlace contributor Chris MacDonald reported that well-known investor and head of ARK Invest, Cathie Wood, added more than 600,000 Nvidia shares to her various funds.
Checking in with the Wall Street Journal, the investment analysts polled rate NVDA stock as “Overweight.” Moreover, their median price target of $250 offers 33% upside — and that’s just over the next 12 months. And given what Nvidia has coming in the pipeline, the long-term picture growth picture should look even better.
Bottom Line on NVDA Stock
So, should you take a chance on NVDA stock? In the short term, Nvidia stock is not immune to the macro forces that have hammered the market in 2022. We’ve seen that in the share price. The company has also felt the negative impact of issues of its own making. The collapse of its deal to buy Arm and a fine from the U.S. Securities and Exchange Commission (SEC) for failing to report the impact of crypto mining on its business come to mind.
However, in the grand scheme of things, the prospect for a return to long-term growth for NVDA stock is strong. I would have few hesitations about taking advantage of its current weakness to add this Portfolio Grader “B” rated stock to my portfolio.
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.