Nvidia's US shares extend losses, now down 4%.

Nvidia's US shares extend losses, now down 4%.

Ask Aime: Is Nvidia's stock price decline a sign of market instability?

Nvidia's (NASDAQ: NVDA) US shares have extended their losses, now down 4% as of April 28, 2025. The stock has been under pressure due to a $5.5 billion charge in the first quarter related to its H2O graphics processing units (GPUs) due to new export restrictions on the sale of its chips to countries like China. This export ban has led to a significant reduction in Nvidia's sales in China, which accounted for 13% of its $130.5 billion in total revenue for the last fiscal year.

The H20 export ban will impact Nvidia's sales in China, but it won't stop entirely. Nvidia sells other chips, such as the L20 and L2, that aren't banned. Additionally, a sizable black market exists in China for Nvidia's chips. The company could also start directing some of the manufacturing capacity dedicated to its H20 chips to other chips, such as Hopper and Blackwell.

Despite the setback, demand for Nvidia's chips remains robust. Cloud computing companies are spending big on AI infrastructure to keep up with the increasing demands of their customers who run AI workloads through their data centers. The big three—Amazon, Microsoft, and Alphabet—plan to spend a combined $250 billion-plus on AI data center capital expenditures (capex) this year. Even without China in the mix, that's a significant amount of potential growth for the company moving forward.

Nvidia's stock is currently trading at a forward price-to-earnings ratio (P/E) of under 23 times this year's analyst estimates and a 0.44 price/earnings-to-growth (PEG) ratio, with numbers below 1 being considered undervalued. If you wiped away $15 billion in Chinese revenue, Nvidia's estimated revenue growth this year would go from 54% to 43%. Meanwhile, it would reduce its 2025 earnings per share by about $0.35 to $4.10, resulting in a forward P/E of about 25 times. Therefore, even with the loss of Chinese revenue, Nvidia's stock would still look attractively valued.

Investors should consider Nvidia's strong fundamentals and the robust demand for its chips, which could make this a good buying opportunity. However, it is essential to monitor the situation closely and remain informed about any updates or changes in export policies.

References:
[1] https://www.tradingview.com/news/zacks:73de6de09094b:0-zacks-investment-ideas-feature-highlights-verizon-apple-and-nvidia/
[2] https://finance.yahoo.com/news/nvidia-stock-falls-export-control-011500030.html