Tech Sell-Off: 2 Top Stocks to Buy and Never Sell

Tea Nasdaq-100 Technology Sector index showed signs of a turnaround last week after a torrid time so far this year, but the index is still down 15% in 2022.

The broader recovery in tech stocks has also led to a rally in shares of Nvidia ( NVDA -1.63% ) and Roblox ( RBLX -7.32% ) — two companies that have borne the brunt of the tech sell-off in 2022.

Savvy investors, however, still have an opportunity to buy these companies at relatively cheaper valuations. That’s because Nvidia is still down 13% in 2022, while Roblox has lost half its value. A closer look at their businesses will indicate that Nvidia and Roblox are worth buying and holding on to for a long time to come, as they’re playing critical roles in shaping the future of technology.

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Nvidia has become popular for the graphics cards it makes that are used in personal computers for video gaming and in data centers that accelerate workloads related to artificial intelligence (AI), machine learning, data mining, or other complex operations. These two GPU-centric revenue streams produce the bulk of Nvidia’s top line and are the key pillars of the company’s growth right now.

More specifically, gaming and data centers produced 87% of Nvidia’s total revenue in the fourth quarter of fiscal 2022, and their terrific growth led to a 53% year-over-year increase in the company’s quarterly revenue to $7.64 billion. The company’s adjusted earnings jumped 69% year over year during the quarter to $1.32 per share. The good part is that Nvidia’s dominant market share in these verticals puts the company in a solid position to sustain its outstanding growth in the coming years.

A businessperson holding a smartphone, surrounded by digital renderings of buildings and stock charts.

Image source: Getty Images.

But there are additional catalysts that could come into play and accelerate Nvidia’s growth. The automotive business is one such example. This segment generated $566 million in revenue in fiscal 2022, an increase of 6% over the prior year. However, Nvidia’s automotive-design pipeline points toward a significant acceleration in this segment’s growth.

The company was sitting on $8 billion worth of automotive design wins in April 2021, which it expects to realize through fiscal 2027. That figure is likely to have improved, as Nvidia recently announced a new partnership with Tata Motors Jaguar Land Rover subsidiary. From 2025, all Jaguar Land Rover vehicles will be built using Nvidia’s Drive automotive platform. Not surprisingly, Nvidia CFO Colette Kress expects the automotive business to step on the gas as the company begins shipments of its automotive products.

Professional visualization is another Nvidia business that’s stepping on the gas. This segment’s revenue had jumped 109% year over year in the fourth quarter of fiscal 2022 to $643 million, while full-year revenue had doubled to $2.1 billion. The catalysts for Nvidia’s professional business visualization suggest that this segment’s terrific growth is here to stay.

That’s because the segment provides solutions to individual creators and enterprises for various applications. From product design to rendering photorealistic interiors and exteriors of buildings and other objects in the architecture, engineering, and construction spaces, Nvidia is tapping several opportunities through the professional visualization business. The company’s Omniverse platform, however, is likely to unlock a massive revenue opportunity: It will help Nvidia tap into the metaverse, where the company can serve fast-growing applications such as the creation of digital twins.

So Nvidia is on track to benefit from multiple growth drivers, which explains why analysts expect its earnings to grow at 30% a year for the next five years. However, it won’t be surprising to see the company do better than that, thanks to the fast-growing markets where it operates.


The massive pullback in Roblox’s stock price this year has opened an opportunity for investors to buy a fast-growing company with tremendous long-term prospects at an enticing valuation.

Known for operating an online gaming platform that allows people not only to play games and engage in other experiences but also to create their own content, Roblox is on track to take advantage of the massive opportunity in the metaverse. The company’s Roblox Studio desktop design tool allows developers to create immersive multiplayer experiences. As it turns out, Roblox developers have raked in more than $1 billion in cumulative earnings over the past four years, and the platform has engaged users for over 95 billion hours.

There are over 29 million developers on Roblox’s platform who create and operate 3D virtual experiences. All of this indicates that Roblox has a head start in the metaverse, where people across the globe can socialize, work, play, learn, and even attend live entertainment events in 3D virtual worlds from remote locations.

Roblox’s huge base of developers and its number of daily active users — 54.7 million in January 2022, up 32% over the prior year — show that adoption of its creative platform is increasing for reasons beyond just gaming. The NFL, for instance, has opened a virtual store on Roblox. Nike also has an interactive area known as Nikeland on Roblox, while concerts and educational events have also been held on the platform.

So, in the long run, Roblox can become an enabler of metaverse content. This could be a big deal for the company, as the global metaverse market is expected to clock 43% annual growth through 2028.

More importantly, investors shouldn’t forget that Roblox was growing at a terrific pace even before the proliferation of the metaverse. The company’s revenue doubled in 2021 to $1.9 billion, driven by a 40% increase in daily active users and a 35% increase in hours engaged to 41.4 billion. The lucrative content opportunity that lies ahead of Roblox, thanks to catalysts such as the metaverse, should help it clock similarly impressive growth for a long time to come.

A great time to buy

Shares of Nvidia and Roblox can be bought at significantly cheaper valuations now than they could last year.

Nvidia is now trading at around 69 times earnings and 25 times sales. These multiples, though expensive, are at a discount to last year’s average earnings multiple of 90 and sales multiple of 30. Savvy investors can still buy Nvidia stock at a lower valuation than last year, and that may be a prudent move given its solid prospects .

Roblox, meanwhile, is trading at 13 times sales as compared to last year’s price-to-sales ratio of nearly 36. The company’s rapid pace of growth and its potential to win big from the metaverse means that investors are getting a nice point of entry into this potential growth stock, which they may not want to miss.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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