@alex alexalex：Nvidia(NVDA) stock continues to plunge. Investors fear a fall in demand from gaming and crypto. Patient accumulation will be rewarded. In a bear market, good news can always be spun as bad news.Nvidia(NASDAQ:NVDA) investors were reminded of this on July 5. The good news is that the chip shortage may be easing. Prices for used gaming cards have plunged. Young gamers who wanted a graphics card for years can now get one, at list prices and lower. But this good news is also bad news. The new supply, from broken crypto miners, is coming as production falls. There are reports Nvidia is cutting back orders from its manufacturing partner, Taiwan Semiconductor(NYSE:TSM). The result is that NVDA stock, which was at $286/share in April, traded recently below $144/share. Short Term Weakness During the bull market, Nvidia was a ferociously expensive stock. Now it’s just pricey. At its July 5 price, the company’s market cap of $362 billion is still almost 39 times last year’s earnings, and over 13 times last year’s sales of $27 billion. The good news is that underestimates the company’s power. First-quarter revenue came in at$8.3 billion, up 46%from a year earlier. Non-GAAP earnings were also up 49% from a year ago. But costs from the cancelled acquisition of ARM Holdings meant GAAP earnings were down 16%. The problem is that investors buy tomorrow, not yesterday. If prices for gaming chips continue to fall, Nvidia’s list prices will as well. That will cut earnings because a lot of the company’s revenue still comes from gamers. Nvidia is due to report its current quarter on Aug. 24, for the three months ending in July. Analysts currently expect $1.03/share of earnings and$8.11 billion of revenue. Field reports of slowing demand, however, indicate it could fall short. The most recent chip stock to report, Micron Technologies(NASDAQ:MU), gave weak guidance. They’re expecting a storm. Nvidia’s ship is being tossed, too. Long Term Strength Analysts continue pounding the table for NVDA stock, even as they cut their price targets. The reason is that lower prices open huge new opportunities. Car makers can now bring those autonomous driving features to the market. Nvidia’s artificial intelligence software can now be offered as a service, with Hewlett Packard Enterprise(NYSE:HPE) bringing it to the network edge. Alphabet’s(NASDAQ:GOOGL) cloud gaming service, Stadia, may now be able to fulfill its promise with an Nvidia upgrade. Even while edge applications for Nvidia chips slow, like gaming and crypto, the cloud continues to grow. Data centers were the biggest buyers of Nvidia chips in the first quarter. Capital spending from the cloud czars, especially Google, Microsoft(NASDAQ:MSFT), and Amazon (NASDAQ:AMZN), remains strong. Lower prices may just mean they’ll buy more Nvidia graphics chips for new applications. Eventually, cloud services at the network center will spur demand for support from the network edge, as prices for things like Meta Network(NASDAQ:FB) headsets come down. Meta, by the way, has been a big buyer of Nvidia chips for its “metaverse” activities. The Bottom Line for NVDA Stock Bear markets end. Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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