Best Stocks 2022: NVDA Stock Can Still Make a Comeback Despite Bleak Forecast
Readers have voted NVDA stock as one of the best stocks of 2022, and while it faces macro-turmoil, it could still finish the year strong.
InvestorPlace readers are big on tech this year. That much is certain based on the fact that readers chose Nvidia (NASDAQ:NVDA) stock as one of the Best Stocks for 2022. And it’s easy to understand why. With its impressive trajectory throughout the last several years and the speculative investing frenzy’s influence on tech, NVDA stock seemed like a no-brainer in January.
Unfortunately, though, things have not kept their pace, and it’s been a thorn in the side of the chipmakers. The stock has seen a 55% decline year-to-date (YTD).
However, there are some positives at the end of Q3. The losses are slowing for NVDA. The stock declined only 14% in the quarter, as compared to the average 20%-plus losses in the two preceding quarters. And with some bullish catalysts for the chip industry, NVDA stock still might find some wind in its sails before 2022 ends.
How Nvidia Got Here
Nvidia, like most other companies in 2022, certainly hasn’t gotten a fair shake. The Federal Reserve is making it difficult for any publicly traded company to turn a decent profit, after all. Rate hikes aimed at killing inflation are holding Wall Street hostage. And being part of a sector that is largely speculative and more volatile than others, NVDA stock and its peers bear the brunt of Jerome Powell’s decision-making.
Not to mention, supply-chain issues aren’t exactly in the rearview. Chip production is still hampered by the effects of a long constrained supply chain. Couple this with the estimated $500 million hit to the company from cutting ties with Russia, and you’ve got a recipe for bearishness.
Investors haven’t been given much to look forward to regarding Nvidia’s incoming earnings report, either. After missing estimates on its Q2 earnings, the company also slashed its forecast for this past quarter to save face. The company projected at the time that it would make $5.9 billion in Q3 revenue — a steep decline from Wall Street’s $6.9 billion expectations. This decline comes as the company predicts a further decline in the demand for graphics cards — a downturn not helped by Ethereum’s (ETH-USD) Merge upgrade killing ETH mining outright.
CHIPS Act, Quantum Computing, the Metaverse Provide a Light for NVDA Stock
Sure, things don’t seem great. But, don’t count NVDA stock out just yet. For all the macroeconomic factors playing the heel to Nvidia’s year, there are positive outlooks for the company.
The U.S. government’s recent chip news does present Nvidia with some positive catalysts, however minor they may be. The CHIPS Act will help furnish the entire U.S. chip industry. Although Nvidia doesn’t manufacture its chips, the rush of cash could help it to rise in sympathy with its American peers. InvestorPlace’s Samuel O’Brient has noted that several investing insiders have gravitated toward NVDA stock in the wake of the news, including Paul Pelosi.
O’Brient also mentions that Nvidia will benefit as the metaverse increases its presence worldwide. As users grow, and computers scale up graphic processing technologies, Nvidia will be there to service those needs. In fact, information leaked earlier this week relating to the company’s new RTX 4090 graphics card. If figures hold true, the card will make for one of the highest-performing cards on the market, working four times faster than the previous generation and producing 360 frames per second at high resolutions.
Quantum computing, like the metaverse, also seems to be a catalyst to look forward to for NVDA stock. InvestorPlace contributor Ian Bezek has named NVDA stock as one of his top bets in quantum computing, thanks to its interest in expanding into the quantum simulations niche, a move helped greatly by its GPU technology.
Bottom Line on NVDA Stock
It might be easy to be down and out looking at NVDA’s performance thus far. And while things don’t look great for the immediate future, there are signals suggesting NVDA might be one of the Best Stocks for 2022.
It’s important to keep in mind that the issues plaguing NVDA stock are, largely, not unique to the company. These are issues keeping all of Wall Street pinned to the wall. Inflation doesn’t reserve itself for certain sectors. And issues of decreasing demand for graphics cards won’t last forever. The world is dependent on computers, making long-term prospects quite high. The decrease in demand is just another symptom of inflation hitting people right in the wallet.
So hold strong, NVDA stock believers! Lots of analysts still paint the stock as a buy, and they will feel vindicated in their takes when all is said and done.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.