The stock of chipmaker NVIDIA Corporation (NASDAQ:NVDA) has tanked considerably recently, but in the past days, NVDA stock has rallied by as much as 50% from its lows, and it is an indication that it is back on investors’ radars.
Key Factors To Watch
Over the past two years, the Nvidia stock has had a rollercoaster ride, and hence, investors need to look a bit more closely into the stock. After the rebound, the trajectory of the stock might not be as obvious as one may think. One of the most important things to keep in mind that on fundamentals, the stock is not actually cheap.
The stock is currently trading at a price to earnings ratio of 53, and in addition to that, the ratio with respect to full-year sales stands at 14. Hence, it is quite clear that those who are interested in NVDA stock would also need to have a degree of risk tolerance. That being said, the demand for faster technology is only going to rise in the coming years, and Nvidia is well-positioned to take advantage of that state of affairs. Experts believe that Nvidia has the required technology that will be in demand for years.
In addition to that, the market is large enough to accommodate three big-ticket players in the form of Nvidia, Intel Corporation (NASDAQ:INTC), and Advanced Micro Devices, Inc. (NASDAQ:AMD). If an investor has a long term outlook, then it could prove to be a clever investment. In the long term, the entry point might not matter as much either. Computers are not changed every year; hence the bearish sentiments with regards to chip stocks might be misplaced.
As a result, stocks like Nvidia might rally strongly at the first sign of easing of the coronavirus pandemic. However, experts also believe that investors might avoid buying NVDA stock after strong rallies and instead wait for the dips to kick in before acquiring it.