Is Nvidia Stock Still Cheap Enough to Buy?

Nvidia Stock

Nvidia stock (NASDAQ:NVDA) will pay a high price due to the United States’ decision to ban the shipment of specific semiconductor chips to China and Russia.

Nvidia (NVDA) has been in the news many times recently, and not for positive reasons. The GPU (graphics processing unit) manufacturer has addressed supply concerns in its gaming area (which also includes cryptocurrency miners). Nvidia’s financials are the worst in years, with sales plunging 33% year on year in its second quarter (which ended Aug. 24) and gross margin plummeting 20%.

What Happened to Nvidia Stock?

Last month, the US government imposed further demand challenges on Nvidia. The sale of has been outlawed in the US. Nvidia’s most powerful (and pricey) processors to China and Russia to limit the spread of sophisticated artificial intelligence (AI) technologies to these nations. These restrictions will likely cost Nvidia $400 million in sales in Q3, depending on whether its clients in China and Russia are prepared to replace less powerful processors.

Issues like this have contributed to a 57% reduction in Nvidia stock (NASDAQ:NVDA) price in 2022. Has the stock dropped down enough, or is it even oversold at this point? Let’s look at Nvidia stock (NASDAQ:NVDA) and see whether it’s an excellent opportunity to purchase the stock.

Nvidia’s third quarter will be a disaster.

Nvidia estimated $5.9 billion in sales in Q3 without the export prohibition. It is now expected to be approximately $5.5 billion. This results in a 23% decrease in revenue year over year. This decline is unlikely to impact Nvidia’s predicted gross margins (62.4%) or operating expenditures. Nvidia’s profit for the quarter should be roughly $750 million based on its new sales projection. That’s a long cry from the over $3 billion profit in the third quarter of last year.


Q3 will be a disaster. If any, however, has yet to be determined of the next quarters will improve. I suspect the US government will remove its chip export prohibition, and gaming demand will not rebound. As a result, this might be the start of many bad quarters for Nvidia investors.

Nvidia Stock has a long way to go before reaching valuation lows.

The short-term prospects of Nvidia stock (NASDAQ:NVDA) seem bleak, but if the company has hit a low price, it may be a good investment. Because Nvidia isn’t yet completely profitable, examining its profitability isn’t as informative as examining its sales. Nvidia’s price-to-sales (P/S) ratio has dropped to a multi-year low.

With its value far from cheap and the company heading downward, there is just too much uncertainty for me to buy Nvidia stock (NASDAQ:NVDA) right now. I’m not confident Nvidia’s next year will be pleasant, and with the economy struggling, Nvidia’s problems may just be starting.

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About the author: Okoro Chinedu is a freelance writer specializing in health and finance, with a keen interest in cryptocurrency and blockchain technology. He has worked in content creation and digital journalism. Since 2019, he has written on various online platforms, and his work has been recognized by several important media sources and specialists in finance and crypto. In addition to writing, Chinedu enjoys reading, playing football, posing as a medical student, and traveling.