NVIDIA share price (NVDA) down 16% in a week. What should you with Nvidia Stock?

Nvidia share price
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Nvidia stock has been under pressure this year falling 55% since Jan 2022 amid high inflation, lower demand, Covid lockdowns and supply chain constraints. Nvidia share price recently fell up to 24% in the last 6 days on below expected quarterly results due to  slowdown in PC and gaming sales, weak revenue guidance and US restricting AI chip sales to China.

Chip exports banned to China

Nvidia said in an SEC filing Wednesday that the US government is restricting sales of high-performance AI chips for servers, the A100 and H100, to China and Russia. Nvidia’s data center business, consisting of A100 and H100, is one of its fastest-growing business, with $3.8 billion in sales in the June quarter, a 61% on-year rise. Due to this, Nvidia now expects to lose $400 million in potential sales in China in the current quarter against $5.9 billion earlier expected. 

Nvidia will need new license for future exports to China, including Hong Kong, to reduce the risk its products being used by the Chinese military.  As per US govt, graphics processors made by Nvidia and AMD could also be used for weapons development, facial recognition and other military uses.

Analysts View on export ban:

“While there are potential near and intermediate term risks from the export ban, Nvidia is working closely with the [U.S. government] to navigate through the situation and we believe the USG is fully aware of the critical/strategic importance of Nvidia’s accelerated compute platform to the global tech industry,” JPMorgan analyst Harlan Sur wrote in a note Thursday.

Is Nvidia stock a value buy?

Analysts are overall bullish on Nvidia's long-term prospects with its cloud business gaining momentum. Nvidia is already dominating the cloud gaming market with 20 million subscribers for its cloud gaming service GeForce Now. Cloud gaming market could be worth $22 billion by 2030 and can give its revenue a significant boost in the long run.

Based on 52 Wall street analysts offering stock ratings for Nvidia, currently, 82% analysts including Truist Securities and Barclays are recommending Buy, and rest 18% including Wedbush and Braid are recommending Hold with the average price target for Nvidia shares is $235.93, with a high forecast of $370 and a low forecast of $150 per share.

Valuation wise also Nvidia looks cheaper at the current PE. Nvidia's PE has fallen by 52% to 49.5 from 102.7 in Nov 2021.

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  • Is Nvidia a Buy Sell or Hold?

  • Why is Nvidia share price falling?

  • What is the PE of Nvidia?

  • Why did US ban chip exports to China?

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