not vested
Nvidia (NVDA)
Notable Risks: Fundamentals, semiconductor weakness, trade wars and broader tech market weakness
Possible Price Range: $100-$160
On May 16, Nvidia reported that its net income had fallen to $394 million in its fiscal first quarter from $1.24 billion during the same period a year earlier.
Overall, NVDA stock did not perform well in the wake of the result, which also included mostly in-line guidance.
The Nvidia stock price has decreased from the mid-$160s to the mid-$130s. It is currently hovering around the $145 level.
Previously a darling among investors, especially in 2017 and most of 2018, it has recently fallen out of grace. Nvidia stock gets a lot of attention, compared with other chip stocks. Many investors regard Nvidia as the premiere graphics-chip stock.
Nvidia sells two main products: graphics processing units (GPU) and Tegra processors. Nvidia’s graphic processing units are used in PCs and data centers. Tegra is a system-on-a-chip (SoC) suite developed by Nvidia for mobile devices. But its Tegra Processors segment only accounts for about 10% of its total revenues.
Over the past year, the price of Nvidia stock is down 45%. Clearly, investors are taking another look at the company’s fundamental growth outlook, which is mostly based on its GPUs for gaming and artificial-intelligence servers.
Wall Street is also debating whether the semiconductor industry, which is highly competitive and cyclical, has entered a prolonged downturn.
The chip sector is being hurt by rising inventories and trade-war concerns. In its quarterly report, Nvidia said that the sector’s inventory levels stood at $1.43 billion, up from $797 million a year earlier.
Despite the recent slide of NVDA stock, it might still be too early to get back into it, given its short-term risks, which make it a highly volatile investment.
In other words, I recommend that investors wait for several weeks before buying NVDA stock.
Source: Investor Place