Nvidia Corporation (NASDAQ: NVDA) saw its shares take a minor hit after analyst at Vetr reduced the tech company’s stock from a “strong-buy” to a mere “buy” rating.
Regardless of the minor stumble, however, investors remain confident in Nvidia’s future, and many financial backers are looking to the company’s 2018 prospects with some glee, expecting a healthy year of growth.
Nvidia will still have its work cut out for it, however; in a crowded market that seems to be increasingly enamored by tech stocks, Nvidia will have to post some impressive results in 2018 to convince investors it remains a stronger bet than its leading competitors.
A small downgrade
While some of Nvidia’s investors were no doubt reasonably concerned after analyst at Vetr downgraded the company’s stock, most market onlookers realize that Nvidia still has huge potential as the economy approaches what’s increasingly appearing to be a roaring 2018. Vetr itself continues to rate Nvidia at a “buy” rating, according to a report released on Tuesday, and other analyst like those at {0|Citigroup} have reconfirmed the company’s existing “buy” rating.
Whether the personal computer company can live up to these hopeful ambitions for its future will likely depend on how well it can capture headlines in 2018. Investors seem to be caught up in an internet of things frenzy, scrambling to pick up shares of any company with its eyes on the future and a focus on emerging fields like artificial intelligence, which Nvidia stands well-poised to help pioneer.
Nvidia’s recent earnings reports, too, have shown investors who may have initially been concerned that they have relatively little to fear. The company has consistently posted strong results recently, with revenues up by more than 30% from this time but one year ago. Nvidia’s strong growth across all platforms also shows that the semiconductor-focused company is more than a one-trick pony, and has the capacity to diversify its business operations in a way pleasing to investors who don’t want to keep all their eggs in one basket.
Nvidia’s impressive market valuation – which currently stands at a staggering $118 billion – should also alleviate concerns that a minor adjustment to its share ratings could trigger some kind of long-term decline for the tech company. Future competition in the tech industry will remain fierce, however, and if Nvidia wants to earn the continued trust and backing of its investors, it will need to show that concerns surrounding potential declines in the near-future are nothing more than anxious worrying.
Beating expectations
A healthy 2018 that sees serious growth in share prices wouldn’t be the first time that Nvidia has beaten expectations. Early onlookers observing Nvidia’s prospects at the end of 2016, for instance, expected 2017 to be a rather gloomy year for the company, which proved to be anything but true; Nvidia’s pioneering of GPUs particularly popular for machine learning applications seems to have reassured tech-savvy entrepreneurs involved in startup investing that the company has a solid game plan for 2018 and beyond.
The market and the media’s current infatuation with tech-related buzzwords like artificial intelligence, machine learning, and of course, cryptocurrencies seems to be favoring the company’s prospects, too. Any good tech company can’t rely on tech-gurus who are up to date on the latest developments alone, and Nvidia’s ability to play into modern trends will likely bring in more unfamiliar investors eager to pick up a tech stock capable of providing solid returns without getting too technical.
After beating its third quarter sales and earnings estimates, financially-sound investors won’t find much of a reason to abandon Nvidia anytime soon, either. That may change if, come 2018, the company starts posting serious losses, but the popularity Nvidia and its products seems to enjoy amongst computer-savvy consumers doesn’t appear to be fading. Nvidia also has a few tricks up its sleeve that could eventually evolve into incredibly sound investments, too.
The company’s unique approach to investing in startups, for instance, has many entrepreneurial-minded investors convinced that it may just find a golden ticket that reaps financial dividends for it for years to come. As Nvidia continues to expand its presence in the GPU market, not to mention its pioneering of emerging tech fields like machine learning and data analytics, its future will look even rosier. The future belongs to those who invest early, and invest wisely, and Nvidia’s consistent ability to successfully pioneer today’s hottest emerging pieces of tech will likely ensure the company’s long-term future despite any downgrading suffered from at the hands of certain analyst. Its massively successfully 2017, too, should ensure that short-term investors who are merely looking for immediate growth will find much to their liking when they eye Nvidia’s stocks. As the new year roars forward, keep an eye on Nvidia; the company’s recent downgrading has only paved the way towards a future that beats all expectations.