News from EA’s partnership fuels long-term NVDA actions brief
Nvidia (NASDAQ:NVDA) is a company with a lot to offer. NVDA Stock is a proven player that has focused on a long-term growth clinic for investors over the past 5 years. If you had bought an Nvidia stock around this time in 2016, you would expect a return of 1.141%. It’s just amazing, especially considering the fact that this isn’t a memes store.
So far in 2021, Nvidia is up 58%. It clearly earned its place on my previous list of semiconductor stocks due to the global chip shortage.
NVDA’s growth trajectory has held steady over the past 5 years, with the exception of a hiccup in late 2018 (I’ll get to that shortly). This makes it a pretty safe bet for continued growth. The latest piece of good news for investors was the announcement last Thursday that the company is partnering with Electronic arts (NASDAQ:EA) on Nvidia’s streaming game service, GeForce NOW.
NVDA stock has appeared on the news, and it’s understandable.
Nvidia announces the extension of its partnership with EA on GeForce NOW
On September 30, Nvidia announced that Electronic Arts would be expanding its stake in GeForce NOW, Nvidia’s cloud gaming service. EA will offer blockbuster games including Battlefield 1: Revolution, Apex Legends and Dragon Age: Inquisition.
NVDA stock jumped about 1% on the news. Not a huge reaction from the market, but a definite boost.
About GeForce NOW
GeForce NOW doesn’t get much ink compared to other Nvidia companies. The ever-popular GeForce RTX 30 series graphics cards for PCs and the company’s rapidly growing data center activities are gaining the most attention.
But GeForce NOW combines elements from these two markets to create a whole new one that the company is now attacking. Cloud computing and Nvidia GeForce graphics open up a great opportunity in cloud gaming. AAA video games are hosted on Nvidia’s servers, allowing gamers which lack powerful gaming PCs to play the games. You can play a demanding game like Dragon Age: Inquisition on a Chromebook or smartphone.
Nvidia says GeForce NOW membership has more than doubled in the past year. Its games are streamed from 30 data centers to gamers in more than 70 countries. The EA deal only makes GeForce NOW even more appealing.
There are millions of gamers who could never afford the PC and GeForce RTX card needed to play AAA games today. But Nvidia is getting $ 9.99 per month on a growing number of them for a GeForce NOW subscription.
Review of NVDA actions
While Nvidia’s long-term growth story looks solid, there are potential issues that could derail it, at least for a short time.
As I mentioned earlier, the end of 2018 was a difficult year for Nvidia. A cryptocurrency crash left the company and the market swimming with surplus video cards and led to the collapse of NVDA shares.
I wrote in July that the company has taken steps to reduce the impact of cryptocurrency volatility on its bottom line. Some the risk is still there, but 2021 will not be a repeat of 2018 for NVDA stock.
The fact that Nvidia is a factory-less semiconductor company is also of concern. Nvidia designs chips, but relies on other companies with foundries to produce them. And these are the same foundries that are at the heart of the semiconductor shortage. Nvidia has largely escaped the effects of the problem, but it could still sting the company.
There’s also Nvidia’s much-publicized deal to buy custom chip designer Arm. The $ 54 billion deal is under intense scrutiny. EU antitrust investigators are expected to render their decision on October 13. After that, it still has to get approval from China. While winning the deal would be another boost (no pun intended) to the long-term growth of NVDA shares, any damage, should the deal fail, will likely be a short-term market reaction. .
In short, NVDA is a Portfolio filing cabinet Action rated “C” – most of its potential pitfalls are likely to cause only short-term pain. The company’s deal with EA for streaming GeForce NOW games is just the latest in a long list of Nvidia wins. And that’s another indicator of why the story of long-term growth is far from over.
As of the publication date, Louis Navellier had a long position on NVDA. Louis Navellier did not have (directly or indirectly) any other position on the securities mentioned in this article. The InvestorPlace research staff member primarily responsible for this article did not hold (directly or indirectly) any position in any of the securities mentioned in this article.
The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publication guidelines.
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