Shares of NVIDIA (NASDAQ:NVDA) have gone oversold for the first time in years. At a Relative Strength Index of less than 29, which it reached last week, the stock has been in the midst of a sharp sell-off. In early January, the stock's 20-day moving average also fell below its 50-day average, a bearish indicator which could have led to the excessive selling.
At a price of around $220, the stock has reached lows not seen since October 2021. Down around 25% since the start of the new year, NVIDIA has hit hard by the recent market volatility. Its price-to-earnings multiple has fallen from more than 90 to a more modest, but still high 68 times its profit.
For investors hoping for more of a discount, however, they may be disappointed. The last time NVIDIA consistently traded at less than 50 times its earnings was back in 2019. The tech company is full of growth opportunities that investors may be more than willing to pay a premium from. From its coveted chips to the company's Omniverse platform, which could be integral in the set up of the Metaverse, NVIDIA could be among the hottest growth stocks to own in the years to come.
Even with the recent drop in price, long-term investors have still benefitted handsomely from the company's growth; NVIDIA's shares are up around 700% in the past five years. While there may continue to be a decline in the stock's price, you shouldn't count on NVIDIA's stock staying down for long.
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