So investors who already hold Nvidia stock may continue doing so, as there are no signs of weakness in the company's business, and the prospects of the markets it operates in are solid. Again, Nvidia leads this space with a share of 80% as per market research firm Omdia, and it is expected to strengthen its grip over this space with an improved product portfolio. Second, the demand for data center accelerators is expected to increase nearly 15% this year, according to Mordor Intelligence, a growth rate that may be sustainable through 2026. As a result, the discrete GPU market's revenue is on track to head higher in 2022, and Nvidia can make the most of this, as it controls 83% of this space. At the same time, higher input costs and a supply chain shortage will lead to an increase in GPU prices, which could result in higher manufacturer's suggested retail prices (MSRPs) from graphics cards manufacturers. A third-party estimate forecasts a 10% increase in gaming GPU shipments this year. But it won't be surprising to see Nvidia grow faster for a couple of simple reasons.įirst, the demand for gaming GPUs is expected to continue increasing in 2022. The company's dominant position in the fast-growing and lucrative video gaming business, as well as the data center graphics processing unit (GPU) market, should help it sustain its impressive growth and outperform the broader market's expectations.Īnalysts expect Nvidia's revenue and earnings to increase 18% in fiscal 2023, which would be a big drop from its fiscal 2022 performance. Nvidia is set to finish fiscal 2022 with revenue increasing 60% and earnings per share growing 74% over the prior year, indicating that its growth is strong enough to support the rich multiples it is trading at. The chipmaker is expected to deliver another solid report with revenue expected to land at $7.4 billion and adjusted earnings at $1.22 per share, which would translate into a year-over-year increase of 48% and 58%, respectively. Nvidia stock has been a fine performer over the past couple of years, rising more than 230% thanks to the robust growth in the company's earnings and revenue.

Additionally, the potential rate hikes will make investments in Treasury bonds more attractive, as they will be yielding higher interest rates, causing richly valued tech stocks such as Nvidia to slide further.Īs a result, Nvidia investors may be tempted to hit the sell button right now and avoid any more losses. The Nasdaq 100 Technology sector index is already down over 14% in 2022, and market watchers believe that it could slide further by the end of the year. Not surprisingly, the tech-heavy Nasdaq 100 index is expected to lose more ground this year and fall into a bear market. The investment bank was previously anticipating five interest rate hikes this year, but surging inflation may force the Fed's hand and lead to a more aggressive policy. Goldman Sachs estimates that we could see seven quarter-point rate hikes this year.

Such a rich valuation makes Nvidia stock susceptible to further declines given the number of interest rate hikes that the Federal Reserve could resort to in 2022. Trading at 74 times trailing earnings, 46 times forward earnings, and 25 times sales, Nvidia stock isn't cheap compared to the Nasdaq 100 index, which sports a price-to-earnings ratio of 34. One of the biggest reasons investors may consider selling Nvidia stock is the company's valuation.

Nvda earnings expectations