Nvidia (NVDA) is facing increasing competition and declining stock prices. This appears to be partly due to profit-taking valuation concerns amid a sell-off of growth stocks, which has very likely contributed to their struggles in the market.
However, due to the company’s excellent operating metrics, I am bullish on Nvidia stock.
Stocks are tumbling as we speak, with the invasion of Russia into Ukraine.
This is an intense moment. If the situation continues to deteriorate, it will affect the global economy and stunt growth stocks.
Meanwhile, higher bond yields could keep tech stocks under control for now as investors bet that the Fed will raise interest rates four times or more this year.
Finally, as you may know, Nvidia, the U.S.-based semiconductor company, accidentally shut down parts of its production due to a cyberattack. A technical malfunction in Nvidia’s emails and developer tools caused outages over the last few days.
In summary, Nvidia stock has been on a downward trajectory for the last few months, primarily due to external factors such as macroeconomic and geopolitical risks.
Interestingly, the operating metrics of Nvidia, which is now the most valuable semiconductor company, remain very strong.
How Will Cyberattack News Affect Nvidia Stock?
The Russia-Ukraine crisis is one of the most significant geopolitical events in recent history. It has been ongoing since 2014, and it is still unclear whether it will be resolved soon. The crisis started when Russia invaded Crimea and parts of Eastern Ukraine, followed by the annexation of Crimea to Russia in March 2014.
For months, Vladimir Putin denied that he would invade his neighbor. Now, he’s sent forces into Ukraine in three different areas. However, there are fears that the conflict is not confined to the physical theater of war.
Nvidia has announced an investigation into a cyberattack that may have taken part of the business offline for two days. According to reports from The Telegraph, Nvidia’s outages over the last two days have been caused by a network intrusion.
The details of the data breach at this company are still unknown. For the time being, the shares have trimmed their gains in response to the incident.
“We are investigating an incident. Our business and commercial activities continue uninterrupted,” Nvidia said in a statement.
“We are still working to evaluate the nature and scope of the event and don’t have any additional information to share at this time.”
Details have yet to emerge regarding the situation. However, there are fears that the attack could originate from Russia.
Explosive Growth Coming
Nvidia’s fourth-quarter earnings and sales were better than expected, with a good outlook for the current quarter.
Nvidia is confident that it will earn about $8.1 billion in revenue for the first quarter, higher than analysts’ expectations of $7.29 billion. The CEO of Nvidia said he sees a lot of demand for chips because they are good for tasks like AI and other heavy-load operations.
GPU usage in data centers could be a great new market for NVIDIA. With more companies using the cloud, demand for data center space is increasing, sparking interest in GPUs. Nvidia has reported a 71% growth in revenue from its data center business, reaching $3.26 billion, reaffirming this narrative.
From making graphics-intensive games look good to providing integration with developing video and audio rendering software, Nvidia has been focusing on creating products that meet the demand from these markets. With 37% year-over-year growth in gaming revenue, this strategy is working.
Nvidia’s business is all about graphics and AI. The company reports sales in its Professional Visualization segment, which grew 109% annually to $643 million last year.
Cryptocurrency mining is a hot topic. Nvidia just announced that it now ships with software that prevents cryptocurrency mining, and miners can buy specialized mining processors instead. It sold $550 million worth of specialized crypto cards in fiscal 2022.
Omniverse to Be a Gamechanger for Nvidia Stock
With Facebook changing its name to “Meta,” it’s not surprising that talk of the metaverse is everywhere. Nvidia has been making a lot of progress with its AR/VR program. Founder Jensen Huang also has some pretty big aspirations for this business.
Metaverses are a new kind of virtual world built on the blockchain. They are not just games. They are worlds that allow people to live, work, and play in a shared online environment.
Omniverse is the first metaverse powered by Nvidia’s game-changing technology called Turing.
The recent rise in the popularity of video games has led to a surge in the value of Nvidia.
However, the Omniverse promises to become even more ubiquitous than gaming. You may be in the metaverse soon. If not, then you will have interacted with someone there.
Wall Street’s Take
NVDA stock is expected to do well as analysts continue to be optimistic about the company’s future. NVDA stock has a Strong Buy consensus rating based on 19 Buys and three Holds assigned.
The Nvidia stock forecast is $362.22, representing 49.8% upside potential.
Bottom Line
Nvidia is a leading provider of GPUs for AI. Its success is possible due to a focus on AI and the fact that it thinks long-term while meeting short-term needs efficiently.
The company has been able to increase sales and revenue in recent quarters, which has led to an increase in its stock price. However, current external events affect the stock price, testing the resilience of long-term investors in the company.
The rapid adoption of digital technology across the globe should result in a rise in demand for semiconductors. Nvidia is well placed to capitalize on this growth after 2022.
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