As you are surely aware by now, there has been a global shortage of microprocessors and other tech components going on for a while. This issue created problems for California-based graphics-chip maker Nvidia (NASDAQ:NVDA) and for Nasdaq-listed companies generally. Consequently, NVDA stock tumbled from its late-2021 peak price.
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Sure, Nvidia is a well-known and respected name among video-game players and developers. Nevertheless, Wall Street turned against Nvidia regardless of the company’s growth and progress amid a persistent chip shortage.
You might say that it’s unfair, but sometimes the financial markets can be irrational. However, an upcoming earnings event might be the catalyst that puts traders in a mood to buy NVDA stock.
At the same time, some skeptics might point out that Nvidia’s well-documented plan to acquire a certain chipmaker didn’t pan out. You might be surprised to discover, though, that this turn of events isn’t necessarily a bad thing at all.
NVDA Stock at a Glance
When NVDA stock topped out at $346.47 in November of last year, it seemed as if the sky was the limit. However, $400-plus wasn’t in the cards, or at least it wasn’t in 2021.
As Wall Street weighed the tech-component shortage and the possibility of a less accommodative Federal Reserve, some of Nvidia’s investors dumped their shares. The shares didn’t hit bottom until January 24, 2022, at around $211.
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There may be a recovery in progress, though, as NVDA stock bounced to $255 in mid-February. A steep drawdown, followed by a fast turnaround to the upside, often presents a buy signal for technical traders.
Of course, technical rules can be broken when an earnings event produces a surprising result. Such an event is imminent, so let’s see what the experts are anticipating.
Another Beat and Raise
If anything can put NVDA stock firmly into the green in early 2022, it would be Nvidia’s upcoming fiscal fourth-quarter earnings release.
Representing the quarter that ended in January of 2022, this earnings report is scheduled to be published after the closing bell on Feb. 16. So, what numbers are being whispered on Wall Street?
Concerning Nvidia’s top-line results, the experts are modeling $7.43 billion in quarterly revenues. That result would represent an improvement of 48.5% compared to the year-ago quarter.
Turning to the bottom line, analysts are bracing for Nvidia to post earnings of $1.22 per share for the quarter. Year-over-year, that would signify an increase of 56.4%.
It’s encouraging to see that the experts have high hopes for Nvidia. For his part, Susquehanna analyst Christopher Rolland envisions “another beat-and-raise” for Nvidia and, in particular, “another record quarter” for the company’s gaming segment.
Costing an Arm and a Leg
In the business world, things don’t always work out as planned. This doesn’t necessarily mean that a company isn’t worth your investment capital.
It’s no secret that Nvidia intended, at one point in time, to buy out a British microchip company called Arm. Reportedly, Nvidia had proposed to acquire Arm for $40 billion.
That acquisition didn’t happen because of regulatory challenges presented by the Federal Trade Commission. Some Nvidia investors might have been disappointed by this turn of events, but perhaps there’s no need to be concerned.
For one thing, Nvidia will save a whopping $40 billion by not engaging in the proposed acquisition. Second, as analysts from Bank of America point out, Nvidia might not have needed Arm in order to achieve its objectives.
“It could be a net positive for NVDA in some scenarios,” the Bank of America analysts wrote. They added, “NVDA does not need to own Arm to use Arm technology to expand in the data center.”
Moreover, it was recently reported that Arm is embroiled in a joint-venture-related dispute, which could cost Arm an arm and a leg. As a result, Arm might end up having to shell out hundreds of millions of dollars.
It certainly appears that losing the Arm deal, isn’t necessarily a loss for Nvidia at all.
Besides, Nvidia is expected to post excellent fiscal results in the company’s upcoming earnings release, based on Nvidia’s forward momentum with the top and bottom lines.
So, regardless of whether you want to own NVDA stock before or after the earnings event, it’s always a tech-sector holding worth considering.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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