Nvidia (NASDAQ:NVDA) emerged as one of the biggest stock market winners last year. NVDA stock generated over 120% returns for its investors in the past 12-months. Though its share price has gotten slightly ahead of itself, the chipmakers glowing reports justify its lofty valuation. Moreover, there’s still plenty of upside remaining with Nvidia, with it poised for an even stronger showing this year.

Nvidia’s incredible graphics processing units (GPUs) are high in demand for some of the hottest sectors, including artificial intelligence (AI), gaming, and data centers. Additionally, its leadership position in the segment has helped it capitalize on the growth of several applications which demand high computing power.

There are concerns about future growth in its hardware division. However, the company is working on developing a robust software stack, enabling it to leverage its hardware stack. Though it’s still early in the piece, Nvidia has plenty of growth drivers to continue growing revenues with its full-stack experience.

Massive Software Opportunities

The world has been buzzing over the metaverse and what it holds for the future of technology. Though it’s tough to quantify how massive the phenomena could be, the growing interest of some of the biggest companies in the world is a sign of things to come.

Nvidia is looking to invest heavily in its software stack with an opportunity worth billions. Moreover, Nvidia’s Omniverse engine could perhaps be one of the biggest growth catalysts for the enterprise.

Unlike the common belief about the metaverse, it’s a reality that every company will need to embrace. There is no single metaverse. Therefore, companies will be looking to build their own metaverses to expand their revenue base.

Nvidia plans to tap into this market by leveraging the power of its hardware stack to make Omniverse the go-to engine for the development of virtual worlds. Nvidia is building “the world’s most powerful AI supercomputer dedicated to predicting climate change.”

Hence, the goal is to develop the most robust and comprehensive engine for companies to build their respective metaverses. Hence, the humongous metaverse opportunity should have investors salivating over NVDA stock’s future prospects.

Solid Outlook Ahead

Despite the bearish calls, Nvidia is in an excellent position to capitalize on the growing demand for its graphics cards. According to Mordor Intelligence, the gaming GPU niche is expected to grow at an annual 14% through 2026.

We’ve seen how the company’s Ampere GPUs have performed so impressively in the past couple of years, outperforming its predecessors. 85% of Nvidia’s users were in an upgrade window last year, which is a testament to its incredible product and loyal customer base.

Moreover, the company has been highly resilient in leveraging the power of AI by creating a data-rich environment. It has truckloads of data through its hardware and software businesses. Additionally, its GPU dominates data centers in terms of AI workloads. A recent study from Research And Markets shows that the data center accelerator market could grow at a jaw-dropping 36.7% between 2021 to 2026.

All these tailwinds will continue to boost Nvidia’s earnings at a healthy annual growth rate for the next five years. Additionally, this would, in turn, justify its rich valuation in the longer run.

Bottom Line on NVDA Stock

NVDA stock has been an outlier in the past decade, generating returns of over 9,000%. It’s been one of the most impressive growth stocks over the years and continues to perform exceedingly well.

Looking ahead, it has multiple growth opportunities within the AI and metaverse spaces. Moreover, its core business is firing on all cylinders and still has plenty of upside remaining. Therefore, despite the high valuation, NVDA stock remains a solid bet.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.