Nvidia Stock Price Down 19% in 2022 – Time to Buy NVDA Stock?

US tech stocks have looked weak in 2022 and Nvidia (NVDA) is no exception. The stock, which was among the top gainers in the S&P 500 in 2020 and 2021, is down almost 19% in 2022.

Nvidia stock is now down almost 31% from its 52-week high price of $346.47 and like most fellow tech stocks, it is also in a bear market territory. What’s the forecast for NVDA stock and is it a good buy in February 2022?

Nvidia stock recent developments: Arm deal called off

Earlier this month, Nvidia called off its deal with SoftBank to acquire Arm Holdings. The deal, which was structured as a mix of cash and stock would have made Nvidia the market leader in mobile chips. However, from the beginning, the acquisition was facing challenges in the UK. Finally, Nvidia decided that it was better to call off the deal.

In their joint statement, the two companies talked about “significant regulatory challenges.” The calling off of the deal hasn’t come as a surprise to some analysts. Geoff Blaber, CEO of analyst firm CCS Insight had predicted in 2020 that the deal would face opposition.

68% of all retail investor accounts lose money when trading CFDs with this provider.

Arm might go for IPO

After the deal was called off Blaber said, “It’s no surprise that the deal has ended in failure.” He added, “Finding a way to appease regulators whilst maintaining the value and justifying the $40 billion price tag has proven overwhelmingly challenging.”

Notably, the deal’s value had risen as most of the payment was in the form of NVDA stock, which has risen sharply since the deal was announced in 2020. Arm would now likely go for an IPO but might not get the kind of valuations that it was getting from Nvidia. It is another setback for Japan’s SoftBank which is already smarting from the steep fall in Didi and Alibaba shares, where it is the largest investor.

NVDA to report its fiscal fourth-quarter earnings

Nvidia would release its fiscal fourth-quarter 2022 earnings on Wednesday. It would be among the most important earnings release of the week along with retail giant Walmart. This earnings season has been quite mixed and we have seen wild price action in tech stocks. Names like Alphabet, Amazon, Netflix, PayPal, and Meta Platforms saw heightened volatility after their earnings release.

Nvidia earnings estimates

Analysts expect Nvidia to report revenues of $7.43 billion in its fiscal fourth quarter ended January; a YoY rise of 48.5%. The company’s revenues had increased 50.3% in the previous quarter. Nvidia’s financial performance was quite strong in the last fiscal year but is expected to taper down this year. Analysts expect the company’s revenues to rise by 28.1% in the fiscal first quarter and 17.9% in the fiscal second quarter of 2023.

Overall, its revenues are expected to have risen 60% in the last fiscal year but analysts expect the topline growth to fall to 18.3% in the current fiscal year.

NVDA’s EPS is expected to rise

Analysts expect NVDA to report an adjusted EPS of $1.22 in the fiscal quarter of 2022, a YoY rise to 58%. Its EPS is expected to rise by 28.2% and 20.9% in the next two quarters. During the company’s earnings release, markets would watch out for commentary on the forward guidance. Notably, the majority of S&P 500 constituents have given lower than expected forward guidance, which indicates that the slowdown in sales and earnings is far worse than what markets are bracing for.

During their earnings release, NVDA might also provide updates on the Arm deal as well as its capex and capital allocation priorities after calling off the Arm deal.

Analysts are bullish ahead of Nvidia’s earnings

Ahead of Nvidia’s earnings release, UBS reiterated its buy rating. It said, “Despite ongoing supply constraints, we expect strong results with revenue guided ~$7.4B or maybe slightly higher as gaming should remain better-than-seasonal due to ongoing channel fill and data center continues to grow >60% YoY before comps there start to become more challenging later this year.”

NVDA stock forecast

Wall Street analysts are reasonably bullish on Nvidia stock. Of the 44 analysts covering the stock, 35 have a buy rating while seven have a hold rating. Two analysts have given the stock a sell rating. Its median target price of $350 is a premium of 46.2% over current prices.

Nvidia stock long term forecast

The long-term forecast for Nvidia stock looks quite bullish looking at the various high growth themes that the company is targeting. Also, the digital transformation and growing gaming demand bode well for NVIDIA stock in the long term. The stock looks like a good ancillary play on the digital transformation. Notably, the autonomous car industry would require a lot of high-quality chips, just like electric cars. NVIDIA is positioning itself to gain a strong position in the market.

NVDA stock technical analysis

Nvidia stock trades below the 50-day and 100-day SMA (simple moving average). The stock has managed to hold above the 200-day SMA, which is currently at $226.97. The price channel has been strong support for NVDA stock. The stock has a 14-day RSI (relative strength index) of 43.2 which is a neutral indicator.

Should you buy Nvidia stock?

Nvidia stock has created phenomenal wealth for investors over the last decade, rising at a CAGR of over 51%. It briefly became the seventh-largest company globally surpassing Meta Platforms.

Nvidia now trades at an NTM (next-12 months) PE multiple of 47.5x. The multiples have come down in line with other tech companies. Amid a slowing topline growth and rising bond yields, markets have derated several tech names.

Meanwhile, if you are a long-term investor, Nvidia looks like a good buy. The company’s earnings release could be a near-term trigger as better than expected guidance and earnings could lead to a pop in the stock.

Buy NVDA Stock at eToro from just $50 Now!