However, after losing half of its market value in less than a year, I see an opportunity to generate strong returns over the long term. I’m not rushing to buy Nvidia stock today as the news is still to develop and settle in. From self-driving cars and supercomputers to transforming work and gaming in the metaverse, the long-term outlook of the semiconductor industry has a lot of promise.
Huge swings in share prices could continue for a while yet. However, the last 12 months have been incredibly volatile for growth stocks in all sectors and markets. It is involved in exciting industries with immense growth opportunities. This valuation is expensive yet probably reasonable. Nvidia stock is valued at a price-to-earnings (P/E) ratio approaching 40 and a forward P/E of nearly 45.
The current valuation is dependent on future growth and it does not look like a bargain to me. The company is battling inflation and facing a possible economic slowdown, which could weaken demand for chips. Not only has this crackdown sparked uncertainty, the macroeconomic conditions could create even more volatility. Given the $400m impact in this quarter alone, it’s easy to make a bear case so that’s where I’ll start. That’s why the US government is treating the exporting of chips as a matter of national security. The technology is still likely in its infancy and any breakthroughs could create lasting competitive advantages.
Nvidia has growth opportunities beyond AI, but there’s no doubt that this is an important part of the business. While it’s impossible to predict the long-term effect, Nvidia predicts that there will be a $400m impact for this quarter alone. These geopolitical trade tensions will impact Nvidia and some of its competitors. The US government fears that these chips could be used by the Chinese military to develop new technologies. Technology has become a focus in these escalations and the US has decided to block the sales of some AI chips to China. Tensions are bubbling between China and the US over Taiwan. In an SEC filing on Wednesday evening, Nvidia said that it had been told to stop exporting two top computing chips used for AI and supercomputing work to China in an SEC filing on Wednesday evening.
0 kommentar(er)
