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NVIDIA (NVDA) Up 125% Last Year: Will Rally Continue in 2022?

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NVIDIA Corporation NVDA stock has outperformed the Zacks Semiconductor - General industry and the S&P 500 in 2021. Shares of NVIDIA soared 125.3% last year compared with the Semiconductor - General industry and the S&P 500 index’s rally of 63.2% and 27.7%, respectively.

The stock’s price rally reflects the company’s robust fundamentals. Therefore, if you haven’t taken advantage of the share-price appreciation yet, it’s time you add the stock to your portfolio.

The company performed brilliantly last year and has the potential to sustain the momentum in 2022 as well.

What’s Driving NVDA Stock Higher?

NVIDIA has been benefiting from the coronavirus-induced work-from-home and learn-at-home wave. Strong growth in GeForce desktop and notebook Graphic Processing Units (“GPU”) has been boosting its gaming revenues. A surge in the Hyperscale demand remains a tailwind for the company’s Data Center business. Solid uptake of artificial intelligence (“AI”)-based smart cockpit infotainment solutions is a boon.

Data center presents a solid growth opportunity for the company. As more businesses are shifting to the cloud, the need for data centers is increasing immensely. To cater to this huge demand, data center operators are expanding their operations across the world, which is driving the demand for GPUs. The company’s revenues from the Data Center end-market increased 55% year over year to $2.94 billion in the third quarter of fiscal 2022.

Better visualization and speed are needed for a thrilling gaming experience, which NVIDIA successfully provides through its portfolio of Pascal architecture-based GPUs. With the emergence of Gaming-as-a-Service and massively multiplayer online games concepts, the demand for GPUs has been surging exponentially.

The Gaming end-market’s revenues reached $3.22 billion in the third quarter of fiscal 2022, reflecting a 42% year-over-year growth.

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Zacks Investment Research

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NVIDIA GPUs have been gaining rapid traction with the proliferation of AI. The increasing use of AI tools in data center, automotive, healthcare and manufacturing industries is expected to drive the demand for GPUs in the long haul.

NVIDIA is already a dominant player in the data center market. The company enjoys a first-mover advantage in the AI field and its expanding product portfolio is capable of capitalizing on the growing adoption of AI in various industries.

Solid Rank & Growth Expectations

NVIDIA carries a Zacks Rank #2 (Buy) currently.

The Zacks Consensus Estimate of $4.33 for fiscal 2022 earnings suggests growth of approximately 73.2% from the year-ago period. The long-term earnings per share growth rate is estimated to be 19.2%.

NVIDIA has an impressive earnings surprise history. The company outpaced earnings estimates in each of the trailing four quarters, the average surprise being 7.7%.

Analysts have raised the estimates for fiscal 2022 and fiscal 2023 over the past 60 days, reflecting their confidence in the company. During the same period, the Zacks Consensus Estimate for 2022 and 2023 moved north by 12 cents and 46 cents, respectively.

Other Stocks to Consider

Some other top-ranked stocks from the broader computer and technology sector include the largest global Customer Relationship Management vendor Salesforce CRM and Hewlett Packard HPE, each flaunting a Zacks Rank #1 (Strong Buy), and CACI International CACI carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s fourth-quarter fiscal 2022 earnings has been revised downward by 7.6% to 73 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 0.43% to $4.68 per share in the last 30 days.

Salesforce’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 44.2%. CRM stock has appreciated 14.2% in the last year.

The Zacks Consensus Estimate for HPE’s first-quarter fiscal 2022 earnings has been revised downward by 6.1% to 46 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 1.5% to $2.03 per share in the past 90 days.

HPE’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14.4%. Shares of HPE have rallied 33.1% in the last year.

The consensus mark for CACI’s second-quarter fiscal 2022 earnings has been revised upward to $4.11 per share from $4.01 over the past 30 days. For fiscal 2022, earnings estimates have been revised downward by 51 cents to $16.42 per share in the last 60 days.

CACI’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.8%. Shares of CACI have increased 8% in the last year.


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