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.
Earlier this year, InvestorPlace.com readers and analysts weighed in on the stocks they believed would see the biggest returns in 2022. Readers chose Nvidia (NASDAQ:NVDA) stock as the pick of the year after two straight years of the stock price doubling.
With that in mind, though, 2022 has not been kind to investors across the board — and NVDA stock has taken quite the beating. Overall, shares are down more than 48% year-to-date (YTD) and 38% since we last checked in.
In other words, it’s been a rough couple of months for Nvidia and its investors. However, can shares bounce back in the second half of the year? Let’s dive in and take a closer look to find out.
How NVDA Stock Got Here
Like many other industries, Nvidia is still feeling the effects of the coronavirus pandemic on operations. Specifically, the supply chain issues related to the firm’s microchips and graphics processing units (GPUs) have put a burden on Nvidia’s operations.
On the flip side, demand still remains high for these chips from Nvidia, and that’s also weighing down on NVDA stock. And that drop can have a snowball effect when it’s coupled with bad customer reviews.
I am talking about Nvidia’s new GTX 1630 graphics card. As InvestorPlace.com contributor Joel Baglole points out, the card “has drawn scathing reviews from critics and generated disappointment among consumers. A review published by technology website Gizmodo said that the GTX 1630 isn’t good for gaming, which is typically what Nvidia’s graphics cards are used for.”
Furthermore, another event that hurt the firm’s outlook earlier this year was the termination of Nvidia’s acquisition of U.K.-based semiconductor firm Arm. According to a statement from the firm, the move was made due to “significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties.” In turn, NVDA stock fell about 14% over the next month.
Tailwinds Remain Strong
Despite this bit of bad news regarding NVDA stock in the first half of the year, there are still plenty of positives to excite investors.
First, Nvidia reported its first-quarter results for fiscal year 2023 in late May. The firm said it recorded record revenue of $8.29 billion during the period, up 46% YOY. More specifically, Nvidia said its data center and gaming segments also had record sales in Q1 — accounting for almost 90% of total revenue for the quarter.
Investors were happy with the figures, as NVDA stock rose more than 15% the following week.
Nvidia is continuing to forge crucial partnerships, too. The company is teaming up with Siemens (OTCMKTS:SIEGY) to “develop real-world uses for the metaverse.” Of course, this a huge move for any company. For Nvidia, it’s an opportunity for the firm’s artificial intelligence (AI) capabilities to grow.
According to InvestorPlace analyst Louis Navellier, Nvidia and Siemens “‘plan to connect Siemens Xcelerator, the open digital business platform, and NVIDIA Omniverse… a platform for 3D design and collaboration.’ This way, Nvidia can combine its real-time AI with Siemens’ physics-based digital models, and thereby combine the best of both worlds — physical and digital.”
Bottom Line on NVDA Stock
Don’t get me wrong: It’s a scary world out there right now on and off Wall Street. With the lingering effects of the pandemic remaining on top of fears of inflation, a recession and more, it’s understandable to be a bit hesitant with your portfolio.
That said, the issues holding down Nvidia’s operations are current problems. With more time, supply chain issues will fade. The high demand will be met as Nvidia — and really, most companies — play catchup.
Nvidia’s underlying business is strong, and that makes NVDA stock strong. The company is still producing record quarterly figures and continues to differentiate itself through its focus on burgeoning spaces like the metaverse and gaming.
It may be difficult to see the forest for the trees with Nvidia right now. With more time and the consistently strong numbers continuing, NVDA stock can return to the front of the pack in the back half of 2022 and beyond.
Nick Clarkson is a web editor for InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.