US Stocks

Nvidia stock could be the best bet of 2021

Nvidia is one of the top tech companies today and it is consistently expanding its market share.

Technology has been a crucial part of our lives and tech stocks have become hot property in 2021. Despite the pandemic, the growth of companies like Nvidia (NASDAQ: NVDA) has not slowed and it is only going to continue hitting new highs in the coming years. Nvidia is one of the top tech companies today and it is consistently expanding its market share. After a recent stock split, NVDA stock is trading at all-time highs. However, the stock is only going to move upwards.

NVDA stock is exchanging hands at $253 today and is up 65% in the past six months. The company has solid financials and holds a dominant position in the industry. With that in mind, let’s dig deeper into my investment theses for NVDA stock.

Membership For Gamers

Nvidia recently announced the membership on its cloud platform known as GeForce NOW RTX 3080 membership. It will allow you to stream more than 1,100 video games at high speed. I believe it is a smart move that will boost the already successful gaming business of the company. It is offered at an annual membership of $200, which is a good deal for gamers.

The gaming industry is growing at a rapid rate and could hit new revenue highs over the next few years. Nvidia generates almost half of its revenue from the gaming business and with this membership, it will be able to attract users who are keen on a high-end gaming experience.

At the end of September, the company already had more than 12 million members on the service. Even if a small percentage chooses to pay for the membership, it will have a huge impact on the bottom line. Nvidia has seen a massive rise in the number of paying subscribers for cloud gaming. This move will help the company get a wider market share of the gaming industry.

Expect Solid Third Quarter Earnings

NVDA stock could hit new all-time highs after the company reports third-quarter results. It is set for a solid quarter and has not disappointed investors in the past as well. In the second quarter, its revenue increased by 68% year over year and hit $6.5 billion. The gaming revenue stood at $3.06 billion which is up 85% year over year.

I believe the company will beat analyst expectations again and report impressive numbers. The bottom line is improving and the company also paid a dividend to shareholders in the second quarter. Whenever a company reports strong financials and beats analyst expectations, the stock soars and the same could happen with Nvidia.

For the third quarter, the company expects revenue to hit $6.80 billion, which is highly possible for it to achieve.

The Bottom Line

All in all, Nvidia is a fundamentally strong company. It is one of the top growth companies in the industry today and with a unique offering like a membership for its gaming business, it is making the right move towards generating high revenue through paying members.

Further, let us not forget the massive potential of ARM acquisition. The company has planned a $40 billion acquisition of ARM and it is undergoing investigation but once the deal is approved, there will be no stopping Nvidia. The deadline for the deal is September 2022. Approval of the deal will take NVIDIA stock to new peaks and the company will be able to dominate the global market.

Nvidia is a healthy and dividend-paying company with ample potential to grow. It is one stock to hold for the long term.

Not Investment Advice Indie Investor is for general information use only. It must not be relied upon by readers when making (or not making) their investment decisions. If in doubt you should seek advice from a professional financial adviser.

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