People around the world play video games every day. In the last few years, perhaps even more frequent – at first due to staying at home because of the Covid pandemic, and now because people are trying to hide from the news. Nvidia and video games are almost synonyms. Or, to be more specific, Nvidia and PC gaming. In any case, a mild form of “gaming addiction” inherent in all of us was of no help to Nvidia stock in 2022 – it dropped 45% over the course of the year. But graphics cards manufacturing is hardly the only area for the tech company – let’s talk about something more extraordinary that may help Nvidia stock push upwards in 2023.
The year 2022 was disastrous for the majority of tech giants whose shares traded on the exchanges, and Nvidia was no exception.
The underperformance seen above was at least partly fuelled by the internal issues the industry faces. Firstly, all the markets have fallen due to the crisis engulfing the world. It’s literally affecting both mice and men, and of course, stock markets and big techs.
Secondly, we shouldn’t forget that graphics cards are connected not only to video games but also crypto – and crypto in 2022 was… well, you know. The downturn in the crypto world leads to a drop in sales of PCs. Plus, the number of PC game releases wasn’t particularly impressive. Added to this, chip sale restrictions and Covid-19 restrictions in China are gathering their momentum. All these factors were weighing on Nvidia stock in 2022.
But Nvidia is much more than just devices for PC gaming and crypto. This heavyweight is also engaged in the development of 5G technologies (such companies are known as 5G stocks), by creating data center GPUs, working on cloud gaming and contributing to the auto industry.
The company is also developing a platform binding 5G technology and artificial intelligence. 5G will speed up the work of AI and the apps based on it. It could in theory become a part of smart cities, security systems, automation, and much more.
Graphics processing units for data centers are another business dimension. Nvidia GPUs speed up data processing and analysis for their clients (including those as huge as Microsoft) boosting the growth of revenue in this segment. Moreover, this growth will probably continue in the coming years.
The next work-stream is gaming. Yes, we’ve already mentioned that PC sales levels were moderate in 2022, but let’s not forget about cloud gaming. It’s possible that you haven't heard much about this industry, but it’s gaining pace every year – and Nvidia is vigorously involved here.
And the final and perhaps unexpected segment is the automotive industry. No, it has nothing to do with car upgrades in racing games. Nvidia supplies its chips to carmakers such as Mercedes-Benz, Volvo, Hyundai and many others. This is yielding revenue for the company so quickly that perhaps we might even see an Nvidia car one day, who knows. But we might be getting slightly ahead of ourselves there.
Despite the crisis in the world and in the stock markets, analysts believe that 2023 will be a positive year for the company. The average forecast for the next 12 months is up to 33% – which doesn’t sound too bad given the current conditions.
Will 2023 be a year of prosperity for Nvidia? We wish we knew for sure. But what we are sure of is that you should always do your own research before making any market decisions.