NVIDIA Corporation (NASDAQ:) shares plunged 6.87% at the close on Wednesday due to the risk-averse mood that led to decline of over 3%.
Nvidia has reported a $5.5 billion expense for the first quarter. This is due to new US rules that restrict selling its H20 AI processor to China and other countries.
This is the first time the financial impact of Trump’s tariffs has been measured. It worried investors, especially since the trade conflict between China and the US is ongoing and not getting better.
The H20 processor was made for the Chinese market, but now selling it to China needs special US government permission. Nvidia has been told this rule will likely stay in place for a long time.
After a recent drop, Nvidia’s shares have decreased by about 22% since the beginning of the year and are now around 30% lower than their peak in January. This has caught the attention of investors who see this as a potential chance to buy.
Analysts believe Nvidia’s stock is currently undervalued. They have set an average price target of $166.59, suggesting the stock could increase by more than 62%. None of the analysts expect the share price to decrease, with the lowest estimate being $115.
On the other hand, InvestingPro’s Fair Value, which combines different financial models, offers a more cautious estimate. It values Nvidia’s stock at $117.08, which is about 12% higher than the closing price from the night before.
It’s important to remember that valuation models are often better for assessing value stocks rather than growth stocks like Nvidia. However, some individual models predict that Nvidia’s stock could rise to $148, which is 41.6% higher than its current price.
Looking ahead, the ongoing trade tensions between China and the US are likely to continue impacting Nvidia’s stock. Additionally, the stock might be affected by how other tech companies perform, as the first-quarter earnings season is just beginning. Nvidia is scheduled to report its earnings on May 28, which is about six weeks away.
Considering the recent decline in Nvidia’s share price and the optimistic forecasts from analysts, the stock might present an interesting opportunity for investors in the coming weeks. Nvidia has previously navigated trade restrictions with China successfully, so it may once again find ways to minimize the impact and reassure investors.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.
