Despite fears mounting from the coronavirus from China, some viable companies have dismissed the bearishness. One of those is semiconductor and technology firm Nvidia (NASDAQ:NVDA). After tumbling in the tail end of 2018, NVDA stock mounted a credible comeback effort the following year. It now looks to continue the ride, even against negative headlines.
Here’s the thing about Nvidia. As one of the elite semiconductors, their products are already incredibly valuable. But with a new wave of innovations coming – led by the 5G rollout and its inherent synergies, such as artificial intelligence and automation – the company is almost guaranteed relevance. Therefore, temporary headwinds, no matter how bad they look now, aren’t enough to derail NVDA stock.
As further evidence, take a look at the organization’s results for the fiscal fourth quarter of 2020. Simply put, Nvidia blasted away Wall Street’s expectations. Against a consensus target for earnings per share of $1.67, NVDA delivered $1.89. On the top-line sales end, management generated revenue of $3.11 billion against a $2.97 billion target.
Some highlights include that EPS was up 136.25% from the year-ago quarter. During the same comparative period, revenue climbed 40.72% higher. In addition, operating income of $990 million represented nearly a 237% lift from fiscal Q4 2019. Finally, the company reported net income of $950 million.
Unsurprisingly, NVDA stock popped up substantially higher during afterhours trading.
That’s not to say that the coronavirus isn’t affecting matters. Management projects a $100 million hit from the outbreak. But the markets have clearly given NVDA stock a vote of confidence.
Here are three more reasons to trust Nvidia despite epidemic-related concerns.
NVDA Stock Is Simply the Best in Class
One of the key aspects for Nvidia’s resounding and sustained success is not only its dominance in its core markets, but also its commitment to benchmark-setting innovations. Among them, the company’s ray tracing capacities for its flagship graphics processing units is a standout attribute.
With today’s gaming environment, it’s no longer just about processing speeds – although that’s the bread and butter of the GPU business. Rather, gamers are looking to blur the line between fantasy and reality. That’s where ray tracing comes in. Through this next-generation tech, consumers experience subtle nuances in gameplay, such as shadows, opaque reflections, and translucent reflections.
However, a “setback” was that not too many gaming titles incorporated ray tracing due to the newness of the technology. But as management highlighted in their fiscal Q4 disclosure, that’s rapidly changing thanks to compelling games like “Deliver Us The Moon,” “Wolfenstein: Youngblood“ and “Bright Memory.”
Ray tracing is already shifting the paradigm, which bodes well for NVDA stock. And keep in mind that industry experts forecast video games to boom across several countries over the next few years. Just in China alone, the gaming market is projected to hit revenue of $25.3 billion.
Nvidia’s Innovations Gaining Serious Momentum
What investors have always respected about Nvidia is management refusing to rest on their laurels. As digitalization trends advanced, the company didn’t waste time spectating. Instead, they got out in front, forging a path of their choosing.
This initiative continues to pay dividends, especially in the data center and edge computing space. According to their Q4 release, Nvidia unveiled the first scalable GPU-accelerated cloud supercomputer in a partnership with Microsoft’s (NASDAQ:MSFT) Azure. Additionally, Nvidia will supply Amazon’s (NASDAQ:AMZN) AWS with T4 Sensor Core GPUs to support AWS Outposts, a hybrid cloud computing platform.
As well, Nvidia is a huge player in the autonomous vehicles space. In December of last year, management introduced an advanced platform that is significantly more powerful than prior-gen autonomous platforms.
While driverless vehicles sound like science fiction, the technologies underlining them are becoming a practical reality. A growing body of evidence indicates that modern automotive safety mechanisms, such as forward collision warning and front automatic emergency breaking, save lives.
Currently, such extraordinary mechanisms are additive to the human driver. But the next step is to take the human out of the equation. It’s a reasonable step given the pace of innovation. Naturally, this too is a net positive for NVDA stock.
Cryptocurrencies Offer an Underappreciated Boost
Like most tech firms, Nvidia has considerable exposure to China. Therefore, both the coronavirus and tariffs impose some headwinds to NVDA stock.
Nevertheless, Nvidia is one of the few companies that is positioned to directly benefit from the epidemic. Despite my pleas for calm and rational thinking, many investors will inevitably panic. Therefore, the gold price has steadily moved higher since late December on risk-off sentiments.
In the meantime, another asset has quietly breached a benchmark level. I’m talking about bitcoin, which at time of writing is trading above $10,000. Moreover, the jump in bitcoin has boosted confidence in many other cryptocurrencies.
It’s not hard to understand the reason. Bitcoin is this century’s gold.
This creates a compelling tailwind for NVDA stock. Back during the last bitcoin bubble – which saw the virtual currency flirt with $20,000 – Nvidia’s crypto-mining optimized GPUs sold for ridiculous premiums. We could see a similar situation pan out if rising cryptocurrency prices spark another mad run.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
