Shares of NVIDIA (NASDAQ:NVDA) have been nosediving this year as growth stocks remain under
pressure. In August, the company badly missed expectations in the second quarter as its gaming
revenue struggled, falling 33% year over year. Total revenue of $6.7 billion during the period was less
than the $8.1 billion that analysts were projecting for the business in Q2. And NVIDIA's adjusted per-
share profit of $0.51 was not even half the $1.26 that Wall Street analysts were looking for.
The news got even worse last week as investors learned the U.S. government would be restricting the
export of certain chips to China, which may put an even further dent in the company's sales.
NVIDIA's stock closed at $136.47 last week, not far from its 52-week low of $132.70. The stock is now
down more than 60% from its high of $346.47. And even with such a mammoth decline, the stock still
isn't all that cheap – it trades at 44 times its future earnings and 16 times its book value.
NVIDIA does have promising growth opportunities as more businesses move their operations online and
update their infrastructure. However, it could take a while before all that pans out as inflation is making
companies push off expensive upgrades, meanwhile supply chain issues are still having an impact on the
global economy.
Shares of NVIDIA are trading around where they were in May 2021. But the stock price has recently
dipped below its 50-day moving average and there could be more downward pressure in the stock. For
now, investors may be better off waiting this one out as the freefall may not be over for NVIDIA just yet.
