Is NVIDIA Stock Worth the Investment Right Now?



The crypto hangover has adversely affected NVIDIA

One of the biggest beneficiaries of the cryptocurrency hype was NVIDIA (NVDA), whose stock rose 950% between February 2016 and October 2018, coinciding with the crypto boom. However, the crypto hangover has caused NVIDIA stock to tank 50% since October 2018.

NVIDIA is still selling down its excess inventory from the crypto boom. The effects of the crypto bust are expected to continue to be felt this year. The chip maker expects its revenue to be flat at best in the current year.

NVIDIA’s sluggish growth is only a part of an industry-wide slowdown, which is the result of many different factors. The global slowdown, especially in China, has hit NVIDIA particularly hard. The chip maker depends on China for nearly 20% of its total revenue.

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NVIDIA stock may still be expensive

Despite its massive pullback since October, NVIDIA stock looks expensive right now. Currently, you’d be paying 7.4x NVIDIA’s 2020 revenue for a CAGR (compound annual growth rate) of 5.4% in the period.

On the other hand, NVIDIA’s rival AMD (AMD) is trading at 2.9x its 2020 revenue, which is expected to grow at a CAGR of 12.0% by then.

Another pullback could offer a decent entry point into the stock, especially for long-term investors.


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