This Is the Big Problem With Nvidia Stock Right Now
Nvidia (NASDAQ: NVDA) stock generated staggering gains this year, with share prices up more than 200%. Making chips for artificial intelligence (AI) purposes and being a big benefactor of more data processing, Nvidia stock has soared to a valuation of more than $1 trillion.
The rapid valuation jump makes it much harder for the AI stock to remain a good buy right now. It's getting more difficult for investors to justify buying a stock with so much growth already priced in. That's a key reason that, despite posting strong earnings results in November, Nvidia's rise slowed in recent weeks.
Another reason for the stock leveling off relates to the U.S. government restricting the types of chips that companies can sell to China. The new restrictions are a problem for Nvidia, as China accounts for a significant part of its business. Of the $18 billion in revenue that Nvidia reported in Q3 of fiscal 2024 (ended on Oct. 29), more than $4 billion (about 22%) came from China. That's up from last year when Chinese sales represented 19% of Nvidia's Q3 top line.
Source Fool.com
