Nvidia (NVDA -0.46%) is a powerhouse in the data center and gaming industries, and investors have come to expect strong financial results on a consistent basis. Unfortunately, the chipmaker released its preliminary second-quarter earnings report on Monday, and the results were disappointing.

Nvidia had previously forecast $8.1 billion in total revenue, but that figure has been cut to $6.7 billion, reflecting a 19% decline compared to last quarter and just 3% growth compared to last year. Management placed the blame primarily on weaker gaming sales, citing a tough macroeconomic environment, but Nvidia noted that supply chain disruptions were also a headwind to data center revenue.

The company is scheduled to release its official earnings report on Aug. 24, so investors are unlikely to get additional context for a few more weeks. But shares of Nvidia tumbled as much 9% on Monday morning in response to the news.

Is it time to sell?

The big picture

Nvidia shareholders (myself included) were understandably disappointed by the preliminary earnings report, but it's important to consider the big picture. Nvidia is the gold standard in gaming and 3D graphics. The company captured a whopping 78% market share in discrete graphics processing units (GPUs) during the first quarter, and Nvidia owns more than 90% of the workstation graphics market.

The company is equally dominant in the data center, where its chips and high-performance networking solutions are used to accelerate complex workloads like artificial intelligence (AI), data analytics, and scientific computing. Nvidia holds more than 90% market share in the supercomputer accelerator space, and has consistently achieved top results at the MLPerf benchmarks, a series of tests that measure the training and inference performance of AI hardware and software across language processing, objection classification, recommender systems, and other use cases.

Better yet, Nvidia has reinforced its leadership in the gaming and data center markets with a robust portfolio of subscription software. For instance, AI Enterprise is a suite of tools that helps developers build, deploy, and manage AI applications. Nvidia also offers frameworks that accelerate software development for specific use cases, such as Isaac for AI robotics applications, Clara for AI healthcare applications, and Drive for autonomous vehicle applications.

Likewise, Omniverse is a suite of 3D design and simulation software. It allows creators to build virtual worlds in a collaborative setting, and it empowers engineers to generate synthetic data for the purpose of training autonomous robots and vehicles.

Those software products supplement Nvidia's hardware, making its compute platform a more comprehensive solution for creative professionals, researchers, developers, and data center operators. Additionally, software revenue tends to come with higher margins than hardware revenue, and CFO Colette Kress recently told investors, "As new products ramp and software becomes a larger percentage of revenue, we have opportunities to increase gross margins longer term." That bodes well for the future.

A strong product roadmap

The Nvidia brand has become synonymous with accelerated computing and ultra-realistic graphics, and the secret to that success is a tremendous capacity for innovation.

Earlier this year, the company released its latest GPU architecture, Hopper, which offers an order of magnitude performance increase compared to its predecessor, Ampere. Nvidia also started producing Orin, a system-on-a-chip that will serve as the AI supercomputer for intelligent and autonomous vehicles. Over 25 automakers have adopted the technology -- including BYD, Lucid Group, and Nio -- and Nvidia currently has $11 billion in its automotive pipeline, up from $8 billion last year.

More broadly, Nvidia has a strong product roadmap that should keep it on the cutting edge of the computing industry. In early 2023, the company will launch the Grace central processing unit (CPU), a data center server chip designed to accelerate AI and high-performance computing workloads. Management says the Grace CPU will provide better performance and twice the energy efficiency of the best server chips on the market today.

In summary, Nvidia benefits from a strong position in several massive markets, from gaming and graphics to the data center and next-generation vehicles. To that end, management puts its market opportunity at $1 trillion.

With that in mind, temporary headwinds like high inflation and supply chain challenges are no reason to sell the stock. In fact, with shares trading at 15 times sales -- a discount compared to the three-year average of 20 times sales -- investors should consider buying a few shares of this growth stock today.