Nvidia crypto
Market Analysis

Is Nvidia Stock A Buy Right Now?

This big chip-maker is growing rapidly, despite its controversial ARM deal now on the rocks, we ask if Nvidia stock is a good buy right now? 

Nvidia (NASDAQ: NVDA) has become highly regarded in many sectors for its high-definition graphic cards that gamers rely upon to help bring life to their immersive past times. But this company is a great one to watch at the very least as there is always something interesting or new to learn about. However, with its current ARM deal facing some hardship, we take a look at this chip-giant and ask if Nvidia stock is a buy right now? 

Bull case 

Raving reviews about Nvidias newest gaming chips show how far ahead in terms of innovation. Demand for the RTX 30-series graphic card has almost outpaced Nvidia’s supply production. Its gaming business is its main growth driver and it seems to be starting a new multi-year growth curve. Last quarter gaming brought in 50% of its revenue and it saw 67% growth year-over-year (YoY). It closed out its fiscal year with $7.76 billion alone for its gaming segment, breaking its own record. 

Nvidia doesn’t just make gaming a better experience, it also has many other ventures, not the least of which is its AI development. Most people are aware of its hand in the development of self-automated vehicles, but Nvidia is also a large player in the development of AI tech for healthcare. It has helped develop numerous technologies in genomics, drug discovery, and smart hospitals. The AI healthcare market is expected to grow 40-50% per year until 2027 where it will be worth more than $60 billion. Nvidia is well-positioned to benefit from this growth. 

On the car side of things, Nvidia is expanding its AI chips and it will supply the chips that will be used in the newest of NIO’s electric cars, the ET7 electric Sudan. Furthermore, Nvidia announced in February that it is producing new chips that are specifically for mining the cryptocurrency Ethereum. Exposure in these two markets will give Nvidia higher levels of diversification.

In more exciting news, Nvidia will also be taking the step to tackle the computer chip market. Its new CPU, dubbed ‘Grace’, entangles the company further into a chip market competition with Intel, until this point Nvidia had not ventured fully into the CPU market. 

Its most recent quarterly report showed earnings increased 64%, whilst its sales rose 61% YoY and despite a global chip shortage, data-chip sales soared 97%. Nvidia would be a strong long-term investment as it has made itself invaluable in multiple sectors. 

Bear case

One major bear case that has hit the news recently is the worry that Nvidia’s much-anticipated acquisition of ARM from Japan’s SoftBank is now in jeopardy. Beset by regulatory hurdles, the UK government has now issued a public interest intervention notice confirming that intervention on this sale will be upheld on the grounds of national security. For those in ARM, this could spell a sigh of relief as a sale to the chip giant could negatively impact its business model as it sells chip designs to competitors of Nvidia. For Nvidia however, this could be a missed opportunity as there are now rumors Softbank could take ARM public should the acquisition prove unsuccessful. 

Additionally, Nvidia’s step into the CPU market takes it into direct competition with Intel. In general, this signals a healthy company and a healthy market, however, in this case, it might not be too prudent to bet against Intel. Intel is a $250 billion company that currently holds a 78% CPU market share. Whilst AMD has been chipping away at this market for a while and holds 7.1%, it leaves investors wondering if this could be too much of a steep climb for Nvidia. 

On a broader level, as a chip giant, Nvidia could see increased competition from its own big customers such as Amazon, who have started to make their own chips. 

So, should I buy Nvidia stock? 

Nvidia, despite its various bear points, is a leading chip stock and one that has exposure to several different markets. Alongside this, it retains a major role in the lucrative gaming market. Although its ARM deal might have an unhappy end, its other recent acquisitions will give Nvidia more market share in emerging markets such as cloud computing and data centers.

The more Nvidia grows, the more diverse it becomes, leaving it in a good position to deal with challenges along the way and continue with long-term growth and development. This makes Nvidia stock a good option for any long-term investor. 

A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free trial now!

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

Poppy Murray
Poppy likes companies that go the extra mile. Her favorite stock is Amazon because she is fond of its innovation, variety, and creative solutions to sustainability.