1 Frightening Reason to Sell Nvidia Stock Before 2022 Ends
Shares of beaten-down chipmaker Nvidia (NASDAQ: NVDA) gained some momentum recently, up 32% in the past couple of months thanks to the broader recovery in the stock market. This was triggered by favorable inflation data and the Federal Reserve's inclination toward slowing the pace of interest rate hikes. But investors shouldn't be too optimistic about the stock's prospects just yet.
That's because the waning demand for graphics cards used in personal computers (PCs) by gamers and cryptocurrency miners has the potential to bring Nvidia stock's rally to a screeching halt, especially considering the high levels of inventory that the company is sitting on. Let's see why this could be a bad thing for the company and weigh on its shares in 2023.
Nvidia's inventory levels have been increasing at an alarming pace in the past four quarters, reflecting the weak demand for graphics processing units (GPUs) as well as sanctions on sales of chips to China. The chipmaker was sitting on $4.45 billion worth of inventory at the end of the third quarter of fiscal 2023 (for the three months ending Oct. 30, 2022), an increase of 71% over the prior-year period.
Source Fool.com
