Since$NVIDIA (NVDA.US)$The stock has fallen nearly 70% since peaking at around $350 in November 2021. Analysts believe NVIDIA Corp, one of the overvalued stocks in the market, was severely overbought near the end of the bull market last year. At that time, NVIDIA Corp had a market capitalization of about $800 billion, a price-to-earnings ratio of about 100 times earnings and a price-to-sales ratio of about 40 times.

However, with the share price down nearly 70 per cent from its peak, NVIDIA Corp's stock now looks more attractive. Although the chip giant is going through a challenging period and is facing a brief decline in profits, these are temporary problems that will not affect the company's long-term revenue growth and profit potential.

NVIDIA Corp's game business unit should rebound after the economic slowdown, making the game business revenue recover and grow again. In addition, the company's data center business continues to flourish and has prospects in artificial intelligence, automotive and other secondary areas.

The fall in NVIDIA Corp's share price is epic, and its share price is much lower than it has been for a long time. As of Tuesday's close, NVIDIA Corp's share price was $115.86. With NVIDIA Corp's share price approaching $100, its forward price-to-earnings ratio is close to 20 times. Therefore, near the current level, NVIDIA Corp shares are worth buying for a long time.

Although NVIDIA Corp may briefly fall below $100, its share price is unlikely to be below average for a long time. The relative strength index of the stock hovers around 30, indicating that the stock is oversold. Although its bottom has not yet been determined, it may be close.

1. The difference of NVIDIA Corp

Although AMD's graphics cards are also excellent, the largest independent graphics card (discrete GPU) manufacturer is NVIDIA Corp. AMD graphics cards may be cheaper, but many players still prefer to use NVIDIA Corp's stand-alone graphics cards.

NVIDIA Corp still controls nearly 80 per cent of the independent graphics card market. Although Intel Corp recently entered the high-end graphics card market, NVIDIA Corp is likely to remain the leading company in this field. NVIDIA Corp's graphics card is still the gold standard in the industry, which may not change soon.

One of the reasons why NVIDIA Corp's share price has fallen so much is that revenue from the company's gaming business fell 33 per cent year-on-year (from second-quarter earnings). There are several reasons for the collapse in revenue from the game business. including the current decline in sales caused by a glut of graphics cards, weaker demand for cryptocurrency mining (many of NVIDIA Corp's game graphics cards are used for mining), and reduced consumer demand for gaming products as a result of the overall economic slowdown.

However, the factors leading to the decline in NVIDIA Corp's game business revenue are temporary. NVIDIA Corp still has top products in the market, and once market conditions return to normal and the global economy gets back on track, his gaming division is likely to make a big comeback.

2. The game business is no longer all of NVIDIA Corp.

People often think of NVIDIA Corp as a game company, but it is much more than that now. NVIDIA Corp's data center business revenue rose 61 per cent year-on-year to $3.81 billion, higher than gaming revenue of $2.04 billion, according to second-quarter results.

3. Valuation

NVIDIA Corp's revenue and profit expectations have been slashed in recent months due to declining revenue from the game business, a weaker market and other factors. Over the past six months, the consensus forecast for NVIDIA Corp's revenue over the next few years has fallen by about 20 per cent, and the consensus forecast for earnings per share for the next few years has fallen by 20-40 per cent, according to the data.

When NVIDIA Corp's share price is high, the market's estimates of earnings per share and revenue may be optimistic. But when Nvidia is as low as it is now, we may see overly pessimistic estimates. Just as NVIDIA Corp was overvalued at the peak of the bull market, analysts may now underestimate it.

Wall Street's average target price for NVIDIA Corp in the coming year is $205, about 80 per cent higher than the current level. Of these, the lowest target price is $110, which is in line with the current share price level, while the highest target price is $320, about 180% higher than the current share price level.

As NVIDIA Corp's performance improves in the coming years, it is hard not to rise sharply in the company's share price. Even a relatively low forward price-to-earnings ratio of 25 times or less can push the share price sharply higher. NVIDIA Corp's stock is likely to rise 100% in the next few years, 200%. Although the stock may fluctuate in the short term, it is undoubtedly a reliable long-term investment.

The risk for NVIDIA Corp is that while the long-term development is promising, technically the market is still in a bear market, so the share price is likely to hit a lower level. In addition, NVIDIA Corp may face increasingly fierce competition. Rising costs due to inflation eroding the company's profitability is also a risk factor that investors should carefully consider.