NVDA Stock Outlook for 2016
NVIDIA Corporation (NASDAQ:NVDA) is a breakout star in the technology sector. Few other tickers, including some of the most well-known names in Silicon Valley, have been able to match NVDA stock’s performance over the last 12 months.
Even as other microchip makers saw their stock prices plummet, NVIDIA stock surged 151.88%. Just to put that into perspective, the NASDAQ Composite actually lost 0.93% over that same period. Talk about beating the market!
If NVDA stock ran out of steam at this point, it would still have been a terrific run. That being said, I still think the stock has a ton of unexplored upside. After all, NVIDIA is on the leading edge of one of the hottest consumer trends in recent years.
No idea what I’m talking about? Let me put it this way: NVIDIA is supplying microchips to help power a device that is the biggest thing since the “iPhone.” Yes, I am serious. It’s the biggest consumer technology since the iPhone and NVDA stock’s rise is proof of that.
I’m talking about virtual reality (VR). Companies like Facebook Inc and HTC have already seen significant demand for their high-end VR headsets, especially from hard-core gamers.
But before I get into the specifics of the technology, I should back up a little…
For those who don’t know, virtual reality is widely considered the next frontier in gaming and entertainment. Goldman Sachs estimates the potential size of this market at a whopping $80.0 billion, which is definitely comparable to the iPhone market. (Source: “The Real Deal With Virtual and Augmented Reality,” Goldman Sachs, last accessed July 7, 2016.)
I’ve used Facebook’s “Oculus Rift” headset before and it’s amazing. After slipping on the headset, I genuinely felt like I had been transported to another world. The graphics were absolutely phenomenal—and that’s where NVIDIA comes in.
The company specializes in graphics cards. It makes some of the best microchips in the world for processing video and images, a necessary ingredient in the VR ecosystem.
In fact, hard-core gamers have already flocked to NVIDIA’s “GeForce GTX” cards. They are the gold standard for VR gaming.
It’s still early days for the VR industry, but that’s probably the best time to be bullish on it. As more games are unleashed for this type of technology, more and more consumers are going to grow curious and want to enter the space.
One by one, they’ll begin to wonder what all the hype is about. Maybe they’ll try it out for a movie, concert, or sporting event at first, but sooner or later, they’ll become addicted. At that point, device manufacturers will have to make VR a staple in all their products.
The gains on NVIDIA stock would be unthinkable.