A pioneer in video game graphics processing unit manufacturing, Nvidia Corporation (NASDAQ:NVDA) is one of the top tech companies today. The company is making its presence felt across various sectors including artificial intelligence and cryptocurrency. NVDA stock is one of the hottest tech stocks to buy for several reasons.
The stock is up 97% over the past year and has gone from $360 in June 2020 to close to $700 today. This stock has the ability to crush the market and make investors rich. NVIDIA has seen impressive growth and massive success over the years. However, this could only be the beginning for the chip maker as it recently announced the release of new chips for mining cryptocurrency. Despite being traded at a high level, the stock remains one of the best bets for investors today. Here’s why I am bullish on NVDA stock.
4-for-1 stock split
NVIDIA recently announced a 4-for-1 stock split that was approved by the shareholders. This will increase the authorized shares to 4 billion and each shareholder of record on June 21 will get three shares for one share held. The shares will be distributed on July 19 after the market close. It is hard to say how the price of the stock will look like after the split takes place.
A company like NVIDIA will announce stock splits only when they believe that the share price will continue the upward momentum. It is a sign that higher profits and growth are on the way.
One must keep in mind that the stock split will do nothing to change the underlying value of the business but it will only divide the ownership proportions. The fundamentals remain the same and the prospects of the company look better than ever. Even if you keep the stock split aside, there is a massive market opportunity that will drive NVDA stock higher.
There is no stopping the momentum of the gaming business
In its first quarter 2021 results, Nvidia reported outstanding growth in earnings and revenue driven by the gaming business. Its revenue stood at $5.66 billion, up by 84% from the same quarter the previous year. The gaming revenue increased by 106% year over year and stood at $2.76 billion.
The gaming sector contributed 49% to the total revenue of the company. The pandemic has accelerated the growth of the gaming industry. With remote work and increasing demand for gaming consoles, the company reported record sales this quarter.
Despite the pandemic and chip shortage, NVIDIA did not slow down.
The company expects revenue of $6.30 billion in the current quarter. About $400 million of the revenue is expected to come from the chips made for cryptocurrency miners. The momentum and growth for the company are undeniable and it can achieve the revenue and growth targets.
All these factors show that Nvidia is well-positioned in the industry to take advantage of the growing demand for GPUs. It will continue to widen its market share and make the most of the growing business opportunities across different business segments.
The bottom line on NVDA stock
To top it all, NVIDIA is a dividend-paying company and it has paid $0.16 per share for the last quarter. It has a dividend yield of 0.09%.
All in all, everything is perfect in regards to Nvidia, and there is not one but many reasons to invest in NVDA stock.
If you want to make the most of the stock split, invest in the stock before June 21. The stock price may fall after the split but you will have more stocks in your portfolio.
NVDA stock is only going to move upwards in the coming months, and it has the potential to be one of the top tech stocks of 2021.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.