Even so, they are still on the table as long-term catalysts. There’s not much discussion about its efforts in these areas today. For instance, self-driving vehicles, not to mention, the metaverse. The Verdict on NVDA Stockĭuring its “hot stock” days, there was quite a bit of talk about Nvidia’s exposure to many fast-growing areas. Two existing catalysts, currently on the back burner, may also extend its growth runway. This could help outweigh weakness in other areas, enabling it to continue reporting strong results. In fact, it had higher quarterly revenue from its data segment ($3.75 billion) than from its gaming segment ($3.62 billion). Last quarter, this segment saw year-over-year revenue growth of 83%. Better yet, demand in what’s increasingly becoming its larger end user segment could come in ahead of expectations.Īs I hinted above, even as gaming growth slows down, demand remains strong with its data center segment. At today’s prices, the stock trades for around 30.5x estimated earnings for this fiscal year. This level of growth may pale in comparison to the numbers reported in the two last fiscal years, but it may be enough to help Nvidia maintain its current valuation. Earnings growth is expected to come in over this fiscal year and the next at 22.3% and 18.8%, respectively. Per analyst forecasts for NVDA stock, revenue growth is expected to come in at 25.3% for this fiscal year (ending January 2023), and 16.7% next fiscal year. However, that’s not the case with one of its other main end user markets. Areas like gaming could see a slowdown in demand. They’ve pushed it to a price far too low given its long-term growth prospects. Instead of correctly repricing Nvidia stock in line with near-term headwinds, investors have overreacted.
Yet while this may have justified a moderate pullback in price, did it justify a 50% drop? In turn, hurting demand for the company’s GPU offerings among key end users across the board. High inflation and rising interest rates could lead to a recession. The current top-of-mind issues could in theory mean big disappointment ahead when it comes to operating results.
Along with this, not only is there the concern of slowing growth post-pandemic. In hindsight, the market may have overestimated how long this level of growth would continue for names like AMD and NVDA stock. The industry is already seeing a post-pandemic slowdown when it comes to demand from end markets like gaming. To some degree, it makes sense why investor sentiment has shifted in a big way when it comes to chip stocks. NVDA Stock and Possible Near-Term Challenges
0 kommentar(er)
