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Can Nvidia survive the tech stock sell-off to become first $1 trillion semiconductor firm?

Dino Kurbegovic

Graphics hardware powerhouse Nvidia (NASDAQ: NVDA) delighted investors during their March 22, 2022, Investor Day presentation. Nvidia stated that they want to become the first $1 trillion semiconductor company.

The company’s total addressable market (TAM) is enormous; with their innovative graphics processing units, they have a seat at the table of gaming, automotive tech, AI, and data centers. Capturing double-digit percentages of each of these segments could see the company easily reach the $1 trillion mark.

The icing on the cake of a rich offering came with the Omniverse announcement from Nvidia. With Meta Platforms (NASDAQ: FB) driving metaverse to the forefront of the news, Nvidia’s push of consumers into a virtual game-centric world seems more plausible than ever.  

Chart and analysts’ predictions

Regardless of such lofty ambitions and strong growth in the previous years, the growth sell-off of stocks affected NVDA shedding 19.4% of the stock price year-to-date (YTD). Right now, the stock is hovering around the 50 and 200-day Simple Moving Averages looking for a positive catalyst to test the upper resistance levels.

NVDA 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Wall Street analysts give the stock a strong buy rating, seeing the average 12-month price of the stock at $351.74. From the current trading levels of $242.48, the stock would have the potential to run up a whopping 45.06%.

Source: TipRanks

The crux of the situation

Nvidia is a founder-led company that has a TAM that seems virtually unbounded. Earnings and sales are expected to grow, perhaps at a slower clip than in previous years, due to supply chain stress and geopolitical tensions. 

Nevertheless, expansion into growth areas such as data centers, automated cars, cloud gaming, and the addition of crypto mining could all serve as tailwinds for more Nvidia chip demand. 

The global semiconductor shortage could take some time until the supply catches up with the demand for Nvidia chips. Though market conditions have looked better, shrewd investors should keep this stock on their watchlists.    

Alternatively, if Nvidia is not a company you feel comfortable investing, in that case, it’s worth looking at three chip stocks that may well provide strong returns in the future in light of the new developments surrounding semiconductor shortages.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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