When it comes to technology stocks, Nvidia (NASDAQ:NVDA) is one of my favorites. That’s why, with the recent market volatility and the growing belief that we may be nearing the end of the current bear market, I decided to take another look at this stock to see if it has finally broken into price territory. Historically, bear markets have been associated with strong gains for long-term investors, as those who focus on value know that they may want to trade in the form of unreasonably depressed stocks.
Nvidia has a reputation for producing high-quality GPUs that can be found in a wide variety of devices, from video game consoles to personal computers. Their GPUs are known for their high performance and advanced technology, making them popular with gamers and other tech enthusiasts.
But Nvidia’s success as an investment goes beyond its products. Not all good companies are good investments, after all. Over the years, Nvidia has become a great stock from an investor’s perspective because of its strong track record of delivering value to shareholders.
Due to its success as a supplier to PC gamers and high-end computer owners, which gives it high margins, Nvidia has been one of the strongest players in the semiconductor industry in the last five years.
However, in recent months, Nvidia’s stock has lagged behind the broader market. It’s not that Nvidia is doing anything wrong, but external market influences have negatively affected stock prices. Additionally, as semiconductor shortages increase, investor sentiment is cooling in the sector.
Despite these challenges, Nvidia remains an important player in the technology space, with strong innovation and a solid track record. Whether its stock performance can rebound in the coming months remains to be seen, but one thing is clear to me: I believe Nvidia will continue to play an important role in shaping our digital future, giving it strong long-term momentum.
External factors ultimately reduce Nvidia’s value
Nvidia has long been recognized as one of the leading companies in the semiconductor industry due to its dominance in several key markets, namely gaming and artificial intelligence. Each year, Nvidia technology has continued to evolve and expand, becoming an important part of our daily lives. Despite occasional volatility in the broader market, Nvidia shares have been trading at record highs, reflecting investor confidence in this pioneering company.
But over the past year, Nvidia has faced some tough times. Several economic factors, including rising interest rates and inflation, had a major impact on the company’s calculations, causing Nvidia’s stock price to drop significantly.
It’s not all about moderation. Weak demand for PCs has had a negative impact on Nvidia’s cash flow, as this has been one of the company’s key markets. Additionally, Nvidia has been facing restrictions on its sales of data center chips in China due to ongoing trade tensions between the US and China.
Finally, there are concerns about Nvidia’s dominance in the hotly contested data center chip market, with many analysts worried that Nvidia may face renewed competition from major market player Intel (NASDAQ:INTC) as it is said to be getting its act together. All of these factors have combined to contribute to Nvidia’s poor performance in recent months.
Nvidia will thrive due to several high-growth areas
Despite facing significant challenges this year, Nvidia remains a force to be reckoned with in the highly competitive technology industry. Nvidia has always been at the forefront of graphics processing and computer simulation innovation, and this technology has kept it ahead of the competition for years. In addition, Nvidia still has an impressive market share in industries such as gaming and virtual reality, both of which are poised for continued growth in the foreseeable future.
Nvidia is currently the leading manufacturer of graphics processing units for PCs, laptops and game consoles. It has an 80% share of the global GPU market and is expected to maintain its dominance in the coming years.
In the third quarter of 2022, PC sales fell 19.5% according to Gartner, the biggest drop in sales since the research firm began collecting sales data in the mid-1990s. However, in time, things will improve. According to Report Ocean, PC sales are expected to grow at a compound annual growth rate of 14.9% between 2021 and 2027, and Nvidia is expected to benefit from this growth.
Nvidia has also been at the forefront of artificial intelligence technology. Nvidia has created powerful machine learning systems that can process large amounts of data with incredible speed and accuracy. Thanks to Nvidia’s innovation, companies and organizations in a variety of industries have been able to use the power of AI to transform their workflows and improve their results. Whether it’s improving healthcare diagnostics, improving supply chains or creating new experiences for virtual reality, Nvidia continues to push the boundaries of what’s possible with AI.
Additionally, Nvidia is poised for growth in the data center sector, which is experiencing strong demand for its high-end accelerators for artificial intelligence and machine learning applications.
And finally, Nvidia’s foray into self-driving car technology is a moonshot that could be a major source of growth in the long term as both automakers and tech companies race to make autonomous vehicles a reality.
Nvidia is one of the leading companies in the rapidly growing fields of PC graphics, gaming and artificial intelligence. In the past few months, its growth has been somewhat limited due to the sluggish PC market and decreasing chip shortages, as well as several macroeconomic factors. But despite the current challenges, Nvidia remains in good shape for the long term with its strong product and dominant position in all of its key markets.
This article first appeared on GuruFocus.