A few months ago, you would hardly be alone in thinking that Nvidia (NASDAQ:NVDA) — or any publicly traded company for that matter — was on the verge of disaster. With the novel coronavirus shutting down the global economy, the situation did not look pleasant. However, NVDA stock has staged a remarkable comeback. At the time of writing, shares are up over 54% year-to-date.
Now, the question has shifted to whether Nvidia’s stock can maintain its momentum. In April, shares jumped 20%. In the following month, Nvidia performed even better, gaining nearly 26%. But with only a third of the way remaining in June, Nvidia finds itself up only 5%.
Granted, this is still a very bullish trajectory, with the tech firm likely to end the first half of this year on a high note. But is there still a case for Nvidia as momentum at least appears to be waning a bit?
If you’re a prospective buyer with your finger on the trigger, you may wish to wait for a discount. However, it’s important to view Nvidia as a long-term investment, which is still best-in-class in its core businesses.
Additionally, certain outside fundamentals fortuitously support the upside narrative of NVDA stock. First, bitcoin and the cryptocurrency market have held up well this year. This bodes well for Nvidia, whose graphics processors are incredibly popular among crypto miners. As the valuation of digital assets increase, so does the economics of mining.
Further, cryptocurrencies act as this generation’s safe-haven asset. While there’s always a case for gold in troubled times, young investors — who have grown up in the information age — find bitcoin more intuitive than analog platforms.
Video Games Are Classic and Still Relevant Catalysts for NVDA Stock
If you think about it, Nvidia may have an almost unassailable bullish narrative if the present Covid-19 crisis worsens. As I just alluded to above, fear is a great motivator for safe havens. Should we encounter a particularly nasty second wave, it’s likely bitcoin will eventually surge to fresh highs.
In that case, NVDA stock could rise on anticipation of greater crypto-mining demand. Plus, there’s recent precedent for this thesis.
But even if bitcoin stubbornly refuses to break out of its present consolidation pattern, Nvidia can always depend on its bread and butter: graphics processors for video games.
Admittedly, it’s hard to find many positives in today’s circumstances. But what I found remarkable about the pandemic is how quickly Americans adapted to the new normal. Most conspicuously, face coverings, which are not part of our everyday culture, have sprouted everywhere. When it comes to doing the right thing for their fellow man, Americans are truly world class.
In this vein, most of our corporate labor force adapted to the crisis through remote work. Once a luxury, organizations of every size quickly mandated this platform for their employees. Thus, while the headline unemployment numbers don’t look too hot, white-collar workers remain largely unaffected.
And that’s especially crucial for NVDA stock and its exposure to the video game industry. With Nvidia’s target demographic still mostly employed, its revenue base is relatively insulated. Moreover, a second wave would inspire another round of staying at home, whether voluntarily or otherwise.
In this scenario, consumers will again have limited entertainment options. However, the big one will be video games. Newzoo forecasted that in 2021, the global gaming market will exceed $180 billion. But that forecast came well before Covid-19 disrupted everything, suggesting it could be understated.
Next-Generation Technologies to Bolster Nvidia
Although the pandemic did its best to distract astute investors, it can’t take away from the fact that we have a remarkable decade before us. In no other time have we enjoyed profound innovations condensed into an unthinkably short time frame. Moving forward, we should easily expect more.
How can I be so confident? In the same way that money begets more money, pioneering technologies lay the groundwork for additional advancements. For instance, Nvidia is at the forefront of the most exciting innovations, including artificial intelligence and cloud computing. From here, the company has developed incredible applications with autonomous vehicle systems and smart city infrastructures.
No crisis can eliminate human societies’ ever-present desire to innovate and to push the envelope. Nvidia is one of the few companies that are not only blueprinting our way forward but offering tangible proofs of concept. For this and Nvidia’s strength in its core businesses, I remain bullish on NVDA stock.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
