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Nvidia’s Stock Suffers Amid Global Market Instability

Nvidia’s Stock Suffers Amid Global Market Instability

Nvidia Stock Instability

Nvidia, prominent microchip designer and AI industry leader, saw a significant decline in stock price of 5.3% on Tuesday, February 20. An impressive 40% stock increase over the past year had drawn the company to the limelight as the third most profitable U.S company, just behind tech giants Microsoft and Apple.

Chip supply issues and global market instability, however, have led to this dramatic downturn. Despite this setback, Nvidia remains hopeful due to relentless innovation and resilience, banking on its robust demand for cutting-edge GPUs for AI computation, gaming, and data centers to make a quick comeback.

This slump, Nvidia’s most pronounced in the recent past, has caused a stir among investors, prompting questions about the company’s future quarterly performance and valuation. Frank Lee, HSBC’s technology research head, stresses the importance of a robust leadership to navigate these turbulent market conditions.

According to LSEG data, Nvidia’s per-share earnings are predicted to be around $4.56, with a forecasted revenue rise to a hefty $20.378 billion, a stark contrast to last year’s $6.05 billion. However, if Nvidia’s upcoming earnings report falls short of perfection due to the significant share price surge, it may lead to a negative reaction from the stock market.

In a similar vein, other AI sector stocks also dove on that Tuesday. Super Micro Computer went down by 11.6%, Arm Holdings by 7.3%, and Advanced Micro Devices dropped close to 6%. Presently, Nvidia shares are being traded at 32 times the estimated future earnings, far exceeding the industry median of 25.4.

Nvidia’s fourth-quarter earnings report is scheduled for February 21, and Stifel, a full-service brokerage and investment banking firm, holds a “Buy” rating for Nvidia shares, setting a target price of $865 per share.

The first report of this development was provided by Sruthi Shankar, with comprehensive follow-up analysis performed by Arsheeya Singh Bajwa and Bansari Mayur Kamdar. Their collaboration offered a more in-depth understanding of the overall situation.

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