The wheels have come off Nvidia's (NVDA -0.68%) terrific stock market rally in the final month of 2021; shares of the graphics cards specialist are down about 13% so far in December after dipping almost 10% halfway through the month. Though Nvidia stock is still up 108% year to date, investors seem to be having second thoughts about the company's prospects.

One of the reasons for the stock's recent dip is probably the U.S. Federal Trade Commission's (FTC) move to block Nvidia's proposed acquisition of British semiconductor company Arm Holdings. Another reason may be the global chip shortage that is likely to continue well into 2022 and potentially hurt Nvidia's sales, as it may not get enough components to manufacture its graphics cards that are used in several applications ranging from personal computers (PCs) to data centers to cars.

Considering these headwinds, will Nvidia be able to replicate its hot stock market performance in 2022? Or will the chipmaker fall prey to external factors that could throw its outstanding growth out of gear?

NVDA Chart

NVDA data by YCharts

What could go wrong for Nvidia in 2022?

The biggest challenge that Nvidia faces going into the new year is justifying its rich valuation, for which it will have to sustain its impressive pace of growth. The chipmaker is trading at nearly 84 times trailing earnings, which is way above its five-year average earnings multiple of 56 and the S&P 500's earnings multiple of 28. What's more, Nvidia is trading at 28 times sales as compared to the S&P 500's multiple of 3.19.

So, Nvidia must keep growing at high rates or investors will be quick to press the panic button at the first sign of trouble. Nvidia recorded 50% year-over-year revenue growth in the third quarter of fiscal 2022 thanks to the gaming and data center businesses along with a 60% spike in earnings per share.

There are a few threats to that red-hot growth that may have led investors to book profits. For instance, PC sales are expected to take a hit next year. The downtrend is expected to begin in the current quarter itself, according to IDC. The research firm expects a 3.4% drop in PC shipments this quarter thanks to supply chain constraints and high logistics costs.

IDC sees the PC market declining close to 5% in 2022, which is likely playing on Nvidia investors' minds, as 45% of Nvidia's revenue in the third quarter of fiscal 2022 came from selling the graphics cards used in gaming PCs. Additionally, the global chip shortage could pose another challenge for Nvidia and restrict it from fulfilling the massive demand for graphics cards.

Even the likes of Apple have fallen prey to the global chip shortage, losing billions of dollars in revenue as the tech giant has failed to make enough devices to meet demand. Something similar at Nvidia could prove catastrophic for the stock in 2022. However, savvy investors should consider using the dips in Nvidia to buy more shares, as there are stronger reasons to buy the stock if we look at the bigger picture.

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Why the stock could jump once again in the New Year

IDC points out in its PC market forecast for 2022 that the demand for gaming computers will remain strong. The overall computer graphics market is expected to grow by $7 billion next year and hit $138 billion in value, according to a third-party estimate. Gaming PCs are expected to hit $37 billion in revenue in 2022, and Nvidia is in a solid position to corner most of this market given its 80%-plus share.

The good part is that Nvidia is working to increase its GPU (graphics processing unit) supply to gamers, which will help it ease the shortage to a large extent by the middle of 2022. Nvidia CEO Jensen Huang had remarked on the November earnings conference call that the company has "secured guaranteed supply, very large amounts of it, quite a spectacular amount of it from the world's leading foundry in substrate and packaging and testing certain companies, the integral part of our supply chain."

Nvidia seems well placed to ship more graphics cards going into 2022, and that should help ease any concerns about the health of its gaming business. The data center business, which produced 41% of Nvidia's Q3 revenue and clocked 55% year-over-year growth, can get even better in the new year thanks to the deployment of new hyperscale data centers.

According to a third-party report, the hyperscale data center market could achieve an annual growth rate of 20% through 2027, creating the need for more data center accelerators that Nvidia sells. As it turns out, the demand for GPUs used as data center accelerators is increasing at an annual pace of 42% and could hit an estimated size of $20.6 billion by 2027.

Throw in new catalysts such as the omniverse and investors have more reasons to be bullish about Nvidia's data center business. All this indicates why investors shouldn't be concerned about the short-term price fluctuations in Nvidia. It can continue to remain a top growth stock in 2022 and beyond, especially considering that its earnings are expected to reach an annual growth rate of over 39% for the next five years. That's plenty of time to buy, hold, and reap the benefits of owning this stock.