TLDR
- NVIDIA stock dropped 8.69% on Monday, erasing nearly six months of gains
- Investors fear new restrictions on advanced semiconductor exports, particularly regarding Blackwell chips
- Despite recent plunge, NVIDIA reported 114% revenue growth for its fiscal year
- The stock is now trading at 26 times expected earnings, below its three-year average
- Concerns about potential export sanctions to more Asian countries are driving the selloff
NVIDIA Corporation (NVDA) shares tumbled nearly 9% on Monday, continuing a downward trend that has erased almost six months of gains for the AI chip giant. The stock closed at $114.06, marking a 13% decline since the company’s recent quarterly earnings report.
The selloff appears to be driven by multiple factors. Chief among them are growing fears about potential new export restrictions on advanced AI chips.
The Wall Street Journal reported this weekend that NVIDIA’s latest Blackwell chips are being offered in China through companies in other Asian countries. This has raised concerns that additional countries – including Singapore and Vietnam – could be added to a U.S. sanctions list.
NVIDIA already faces restrictions on exporting its most powerful chips to China. The company has been working to combat fraud and illegal transshipments as it tries to comply with existing U.S. export rules.
Monday’s decline was part of a broader selloff in AI-related stocks. However, NVIDIA-specific concerns contributed significantly to the drop.
The stock has now fallen below its levels from six months ago. This marks a stark reversal for a company whose shares soared throughout much of 2024.
Despite the recent stock performance, NVIDIA’s business fundamentals remain strong. The company beat revenue expectations in its recent fiscal fourth quarter.
NVIDIA reported revenue growth of 114%
For the full fiscal year, NVIDIA reported revenue growth of 114%. The company has also predicted record revenue for the current quarter.
While revenue growth may slow in the coming year, both sales and earnings are expected to continue increasing. This creates what some see as a potential buying opportunity.
The stock is now valued at approximately 26 times the next 12 months’ expected earnings. This represents a significant discount from its three-year average of 35 times earnings.
NVIDIA’s market capitalization now stands at around $2.8 trillion. This represents a decline of roughly $900 billion from peak levels.
The stock has experienced significant volatility in recent days. On Monday alone, NVIDIA shares traded in a range from $112.28 to $123.70.
The current pullback might present an entry
For potential investors who might have felt they missed out on NVIDIA’s dramatic rise last year, the current pullback might present an entry point. However, concerns about export restrictions continue to weigh on the stock.
NVIDIA maintains its position as the leader in artificial intelligence advanced chips and software architecture. This leadership position remains intact despite the recent stock performance.
The company continues to pay a small dividend, with a current yield of 0.03%.
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