Buy Nvidia Stock For Long-Term Growth, Not Quick Profits

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Nvidia (NASDAQ:NVDA) shares have been on fire since 2019. Actually, they began to take off in 2016, but the end of 2018 brought a crypto hangover that saw NVDA stock plummet. However, after that unpleasantness, it was onward and upward for their share price.

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That trajectory has seen NVDA shares post returns of 533% since the start of 2019. They have been surging since mid-May, when the company announced a four-for-one stock split. Nvidia stock is up 36% since that news broke.

Given its growth story, is there still time to add NVDA stock to your portfolio? There is potential for a price pullback after that stock split happens, so I wouldn’t look at Nvidia in terms of big short-term gains.

However, as a growth stock, Nvidia is likely to reward you over the long term. The company is ideally positioned to keep winning on multiple fronts.

NVDA Stock: Graphics Cards for Gamers and Crypto Miners

PC gaming was already popular, but it got a huge boost during the pandemic. And for new and experienced gamers alike, there is no hotter purchase than one of Nvidia’s GeForce RTX 30 series graphics cards. They deliver the cutting edge performance PC gamers demand, with ray-tracing and AI-enhanced upscaling. Nearly a year after the first round of RTX 30 series cards was released, they remain all but impossible to find in stores.

The cards aren’t just being used for PC gaming, though. Mining cryptocurrencies requires high performance GPUs. After RTX 30 series cards were snapped up by crypto miners, Nvidia began producing cards directly for this market. These professional crypto mining cards are optimized for the task, stripped of bells and whistles more suited to gaming.

Even though cryptocurrency prices have been volatile, it seems likely that the digital cash alternatives are here to stay. Nvidia is protecting itself from another crypto hangover with its new card. If the crypto market crashes, these specialized cards are useless to gamers. That eliminates worries about crypto miners flooding the market with cheap cards and undercutting RTX 30 series sales.

The AI Factor

Last fall, Nvidia agreed to acquire custom chip designer Arm Holdings in a $40 billion deal. It’s questionable whether the deal will ultimately go through. First of all, there are geopolitical issues — Arm is a UK-based company. Second, Arm designs custom processors for a who’s-who of the tech world, including the A-series chips found in all iPhones. That means there are anti-competition concerns.

However, if the deal were to go through, Nvidia — already a semiconductor powerhouse — would become a true giant in the industry.

Advanced technology such as AI, autonomous driving and machine learning requires the power of parallel processing. That has translated into huge growth in data center business for Nvidia, and those gains are expected to continue. The AI market alone is projected to hit $554.3 billion by 2024.

The Switch Pro

Finally, let’s circle back to gaming — console gaming, specifically. Headlines have been dominated by next-generation consoles such as the Xbox Series X by Microsoft (NASDAQ:MSFT) and Sony’s (NYSE:SONY) PlayStation 5. However, the truly unstoppable console of recent years has been the Nintendo (OTCMKTS:NTDOY) Switch. As of May, Nintendo has sold nearly 85 million units since the Switch launched in 2017, making it one of the bestselling consoles of all time.

The Switch uses a custom processor from Nvidia, and Nintendo just announced its new Switch OLED Model. Surprisingly, the model will not have its expected upgrade to 4K graphics — possibly due to a semiconductor shortage. Even so, the console’s popularity means that NVIDIA will see new orders for processors and ongoing demand that will continue for years.

Bottom Line on NVDA Stock

Even NVDA stock has some associated risk, especially in the short term. If the Arm deal collapses, that might impact share prices. The stock split could also cause a price drop. A complete collapse of the crypto market shouldn’t affect NVDA stock as it did in 2018, but it could spook investors.

However, with multiple lines of business seeing strong demand, the long-term growth prospects for this Portfolio Grader “B”-rated stock are excellent. That’s why NVDA stock makes my list of surging semiconductor stocks and so many investors are adding its shares to their 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.

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