Nvidia (NVDA 6.98%) stock has been a stellar performer on the market in 2021 as investors have applauded the tremendous growth in its revenue and earnings. But the stock short-circuited last week after it emerged that the U.S. Federal Trade Commission (FTC) is moving to block Nvidia's proposed $40 billion acquisition of Arm Holdings.

Shares of the high-flying graphics specialist fell more than 4.4% on Dec. 3 as investors reacted negatively to the news. It looks like the bad times aren't over just yet; Nvidia stock was down another 2% on Dec. 6. The stock's correction in the wake of the FTC's decision isn't surprising, since the acquisition would have significantly expanded the chipmaker's empire in fast-growing technology niches.

Man in specs looking at a line chart on a laptop.

Image source: Getty Images.

Savvy investors may want to consider taking advantage of Nvidia's latest correction to buy more stock. Here's why.

The bad news seems priced in already

Assuming the FTC's intervention is the final nail in the coffin for Nvidia's proposed takeover of Arm, the graphics specialist would stand to lose out on the licensing fees it would have earned from chipmakers across the globe that make chips based on Arm's designs. Arm has generated just over $2.1 billion in revenue over the past 12 months, but that's less than 10% of Nvidia's trailing-12-month revenue of $24 billion.

Meanwhile, Nvidia already uses Arm's designs to make its processors and it would continue to do so despite the deal to acquire Arm hitting a near dead-end. Wall Street analysts also believe that the news of Nvidia's failure to complete the Arm acquisition is already baked into the stock price. The chipmaker had indicated on its November earnings conference call that the deal was facing regulatory hurdles in Europe and the U.K., while Arm licensees were also pushing back against the deal.

Nvidia's stock price is down 5% since its fiscal 2022 third-quarter report was announced on Nov. 17, in what has been a topsy-turvy ride for the stock despite a solid set of results. The good part is that the stock's pullback has made it relatively cheaper to buy. Nvidia is now trading at 92 times trailing earnings and 58 times forward earnings. While these multiples aren't cheap, it is worth noting that Nvidia stock was trading at more than 102 times trailing earnings at the end of November.

NVDA PE Ratio Chart

NVDA PE Ratio data by YCharts

With the bad news priced into the stock, investors may want to use the relatively cheaper valuation to buy more of Nvidia. The company has several growth drivers -- both existing and emerging -- that could help it sustain its terrific growth.

Nvidia has a lot going for it

Nvidia's dominant position in the market for gaming graphics cards, where it holds more than 80% share, is a key driver of the company's rapid growth. Its gaming revenue jumped 42% year over year in Q3 to $3.22 billion and accounted for 45% of the top line. The graphics card market is expected to grow nearly tenfold by 2028 and hit $246 billion in revenue as compared to 2020's revenue of $25 billion, according to a third-party estimate. So Nvidia's biggest business seems set for healthy long-term growth.

The company's data center segment, on the other hand, has newfound catalysts thanks to emerging applications such as the omniverse. They could open a revenue opportunity worth $10 billion over the next five years, according to Wells Fargo. Nvidia's data center revenue increased 55% year over year in Q3 to $2.93 billion, and it was its second-largest business after gaming.

In all, Nvidia's largest business segments have healthy catalysts in place, which explains why analysts expect earnings to grow at nearly 40% a year for the next five years. Investors looking for a top growth stock should take advantage of the pullback in Nvidia and consider going long. The stock looks set to surge higher in the long run.