What happened

Shares of Nvidia (NVDA -4.35%) were up as high as 5.1% at the market open on Tuesday before cooling off with the broader market. As of 1:55 p.m. ET, the stock was holding a gain of 0.95% for the day, trailing the S&P 500's 1.42% intraday return. 

^SPX Chart

Data by YCharts

Chip stocks have fallen deeply out of favor on Wall Street, but Nvidia is benefiting from news that its new gaming graphics processing units (GPUs) are sold out everywhere after launching last week.  

So what

Nvidia launched its highly anticipated GeForce RTX 4090 GPU on Oct. 12 at the steep price of $1,599. While that is out of reach for most gamers, the fact that it didn't take long to completely sell out suggests demand for graphics cards is running higher than the market is giving Nvidia credit for.

The stock has fallen 59% year to date, primarily due to slowing year-over-year growth in its gaming segment, which generates nearly half of the company's revenue. Gaming revenue fell 33% year over year last quarter. 

However, investors should be careful about reading too much into the demand for the RTX 4090, as it's just one component of Nvidia's business. The larger data center business posted growth of 61% year over year last quarter, although that also showed a deceleration over the previous quarter.

Now what

Nvidia won't report earnings results until November. Given the weakening PC market and recent government restrictions on chip exports to China, investors have low expectations heading into the next update, which could set up an earnings surprise. What will be most important is how management characterizes the demand for its new gaming GPUs and the outlook heading into 2023.