After skyrocketing 126% in 2021, Nvidia's (NVDA 3.71%) market value currently stands at a staggering $665 billion. Yet by providing the technology that powers enormous markets like digital entertainment and cloud computing, the chipmaker is poised for even more gains in the year ahead.
Here are three powerful growth drivers that could propel Nvidia's stock price to greater heights in 2022.
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1. Gamers galore
Across the world, an estimated 3 billion people play video games. The global gaming industry, in turn, will generate nearly $220 billion in annual sales by 2024, up from $180 billion in 2021, according to analytics company Newzoo.
Nvidia has become a leading technology supplier to this massive and steadily expanding market. Its graphics processing units, or GPUs, are in high demand among gamers seeking top-tier performance and power efficiency.
Nvidia is also building out its own cloud gaming service called GeForce Now. Members can stream over 1,000 games onto their desktops and mobile devices. Gamers can play up to one hour per session for free, while premium plans ranging from $49.99 to $99.99 per six months provide longer sessions and access to higher-performance servers.
Nvidia's deal with digital entertainment giant Electronic Arts has brought popular game franchises like Battlefield to GeForce Now. Nvidia has also struck partnerships with the likes of Samsung and AT&T to bring its cloud gaming service to their TV and 5G customers, respectively. Thanks in part to these partnerships with game and device makers, GeForce Now's members base has grown to more than 15 million subscribers.
With the game market set to grow even larger, investors can expect Nvidia to sell many more GPUs and cloud gaming subscriptions in the coming years.
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2. Torrid data center growth
Incredibly, Nvidia's data center business is expanding at an even faster clip than its gaming operations. While the tech titan's gaming revenue jumped 42% to $3.22 billion in its fiscal 2022 third quarter, its data center sales surged an even more impressive 55%, to $2.9 billion.
Nvidia is a major beneficiary of the growth of cloud computing, as well as the rising adoption of advanced technologies such as artificial intelligence (AI). The semiconductor leader's chips are helping its customers make the most of their cloud data, with GPU-accelerated functions like analytics, forecasting, machine learning, and natural language processing.
Demand, in turn, is booming. That's likely to remain the case for the foreseeable future, as the world shifts more of its data and computing processes to the cloud.
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3. The metaverse awaits
Nvidia has a third exciting growth opportunity in the metaverse, a budding network of 3D worlds that some investors believe represents the next evolution of the internet. CEO Jensen Huang wants to help businesses build virtual simulations and robotic applications for a wide array of tasks. To do so, Huang has placed Nvidia's Omniverse platform at the heart of its metaverse initiatives.
To rapidly gain traction among the 45 million professional creators around the world, Nvidia is making its real-time 3D design and simulation tools available for free to artists and designers. Nearly 100,000 creators have already downloaded its Omniverse applications since the platform's beta launch last year.
But this is far from simply a charitable endeavor. Nvidia plans to eventually charge an annual licensing fee of up to $1,000 per user. With demand for these tools expected to soar in the coming decade, some analysts predict that the addressable market for Nvidia's Omniverse platform could eventually exceed $100 billion per year.
Many ways to win
With its leading positions in gaming, data centers, and the metaverse, Nvidia's business appears set to expand at an impressive rate for many years to come. Investors who buy shares today should earn handsome returns, as the tech juggernaut's stock price rises along with its sales and profits.
