Nvidia (NASDAQ:NVDA)
After another analyst issued a cautionary note to investors on Monday, Nvidia stock (NASDAQ:NVDA) dropped 4.5% at 1:15 p.m. ET.
For his part, Cowen analyst Matthew Ramsay maintained his outperform rating and $180 price target on the Nvidia stock. The analyst expects Nvidia (NASDAQ:NVDA) to expand in the future. Still, he is worried about the increasing headwinds in semiconductors due to the weakening PC industry in the near future. Due to this, Nvidia stock has dropped 60% so far this year.
What’s the Reason for Nvidia Stock Drop?
There are now new export controls on chips in the United States. The measure aims to prevent the Chinese military from acquiring cutting-edge computer systems from American manufacturers. There might be a quarterly revenue loss of $400 million for Nvidia (NASDAQ:NVDA). However, it is just a fraction of Nvidia’s current issues.
In recent months, the market for personal computers has declined sharply. Nvidia (NASDAQ:NVDA) sophisticated processors for data centers have been relatively stable this year. Still, Nvidia (NASDAQ:NVDA) faces the most near-term risk in the gaming market. Last quarter, gaming chips accounted for 31% of Nvidia’s revenue, down 33% year over year.
Yet, the data center industry may be seeing a similar decline in demand as the consumer sector. Hyperscale clients accounted for just 1% of Nvidia’s revenue growth last quarter. This is a considerable decrease compared to the sequential rise of 15% seen in the first fiscal quarter.
What’s Next?
Since demand for its gaming processors has slowed, Nvidia has an overabundance of stock in the channel. As Nvidia clears channel inventory to make way for the new RTX 40 series of gaming graphics-processing units (GPUs), the company’s profitability is expected to be low until the end of the year.
When Nvidia (NASDAQ:NVDA) reports its profits, investors should pay attention to how the management describes demand in the gaming and data center industries. Until Nvidia stock proves steady in both markets, the stock could not rise.
Both of Nvidia’s stock’s declining sectors might put a damper on growth next year.
Featured Image- Megapixl @ Ifeelstock
Author Shariq Khan 
