Over the past few months, we’ve seen Nvidia (NVDA) stock tumble from its all-time highs of above $400. While it’s good news that investors have the opportunity to get in at a cheaper price, it’s important to ask the question: Should we use weakness as an opportunity to accumulate NVDA before its next launch?
Before we can answer that question, let’s take a look at what Nvidia has been able to achieve over the last few years. Since its IPO in 1999, the semiconductor firm has had a remarkable run, becoming the world’s biggest maker of GPUs (graphics processing units) used for gaming rigs, AI training, cryptocurrency mining, and autonomous vehicle development.
In the last five years, Nvidia has successfully moved from gaming to eyeing a higher prize in the data center market, driven by the Internet of Things (IoT), cloud computing, and artificial intelligence (AI) applications. These new markets have enabled Nvidia to expand its reach and continue to push the boundaries of innovation.
Now that we’ve looked at the accomplishments by Nvidia, let’s look at what lies ahead for the firm. Nvidia is set to launch its much-anticipated Ampere series of GPUs in the coming months and the tech enthusiast community is eager for the launch. It’s rumored to have RTX 30-series GPUs that would succeed the current RTX 20-series, and the company has promised to deliver better performance at lower prices.
So, what does this mean for investors? If the launch is successful it would give Nvidia the chance to compete in higher-margin markets and it could also significantly increase its market share. And if the GPUs are priced competitively, it could further boost the firm’s top-line growth and profitability.
While the launch of Ampere brings promise of higher profits and revenues, it also carries risks. It’s tough to predict how the market will respond and there’s a chance that Nvidia could miss its mark when it comes to pricing.
However, considering the current weak stock price, along with potential earnings growth on the horizon, we believe that investors should use this an opportunity to accumulate NVDA shares before its next launch. While there is a chance that the stock could further decline in the short-term, the rewards could be rewarding in the long-term.
In short, it is important to remember that investing in Nvidia is a long-term play and that stock prices may go up and down based on market whims. Investors should always evaluate the risks and rewards before taking a position, especially as the stakes get higher with upcoming product launches such as the Ampere series. With that being said, there appears to be an opportunity to accumulate NVDA with its current weak stock price in preparation for its upcoming launch.