Nvidia Stock Looks to Break a Losing Streak. What’s Holding It Back.

Nvidia stock was gaining early Tuesday. Enthusiasm for cheaper valuations looked to be outweighing concerns over chip exports to China.

Nvidia stock was up 1.9% at $463.82 early on Tuesday, on track to break a three-day losing streak.

While the tripling of Nvidia’s stock price so far this year is still impressive, investors are having a hard time shaking off concerns about the company’s exports to China in the face of U.S. restrictions.

Nvidia has sought to design artificial-intelligence chips for sale to China that comply with U.S. regulations. However, the latest message from the Biden administration suggests government officials will be watching the results carefully and won’t hesitate to step in if they judge Nvidia is overstepping the mark.

“If you redesign a chip around a particular cut line that enables them to do AI, I’m going to control it the very next day,” Commerce Secretary Gina Raimondo said in a speech at an annual national defense forum in California over the weekend, in reference to China.

“The United States does not want China acquiring anything that could even remotely be used for AI development, and now it’s delivered a direct warning to Nvidia about its practice of developing workaround chips for the Chinese market,” wrote Oppenheimer analyst Rick Schafer in a research note on Tuesday. He has a Buy rating on Nvidia stock with a $650 price target.

On the other hand, Nvidia’s stock price drop from more than $500 in late November has brought its valuation down and has made some more analysts more enthusiastic about a buying opportunity.

Melius Research analyst Ben Reitzes noted in a research note on Monday that Nvidia stock now trades at around 20 times projected 2025 earnings per share. Reitzes has a Buy rating on Nvidia stock with a $750 target price.

“[Nvidia’s] full stack approach with software should warrant a premium,” Reitzes wrote.

Write to Adam Clark at [email protected]