Nvidia’s Shares Take a Dizzying Slide to a Five-Month Low Amidst Reports of Canceled China Orders, Brace for Turbulence!
Nvidia stock hits five-month low following reports of canceled orders in China
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Nvidia’s Dive: Chips, Restrictions, and Stock Price Plummet
In a shocking twist of events, Nvidia Corp’s shares took a nosedive, plunging by nearly 5% to a nearly five-month-low. But what caused this stock market calamity, you ask? Well, it seems that the artificial intelligence (AI) giant may be forced to cancel up to $5 billion worth of advanced chip orders to China. Hold on to your hats, folks, because we’re about to dive into the story behind this eye-catching headline.
Last week, Nvidia received the dreaded news that its AI chip orders destined for major Chinese tech companies, including the likes of Alibaba Group, TikTok’s ByteDance, and Baidu, are subject to the latest export restrictions imposed by the U.S. Commerce Department. Ouch! Looks like Uncle Sam is tightening the reins on technology exports. If you’re wondering what led to this dramatic turn of events, consider checking out this article on the latest export restrictions.
Unsurprisingly, this blow hit Nvidia’s stock hard, dragging it down to $392.30, a 4.7% drop, the lowest it’s been since mid-June. Just a quick reminder, this stock has been riding the waves of success, being one of the major propellers of the Nasdaq gains. But hey, even the best surfers wipe out sometimes! Since its all-time high close of $493.55 on August 31, it has tumbled down by nearly 20%. Talk about a rollercoaster ride!
Tom Plumb, the chief executive and lead portfolio manager at Plumb Funds, had some enlightening insights to offer. He mentioned that the stock is getting practically oversold. It’s like when your favorite band’s concert tickets go on sale, and everyone is scrambling to purchase them—except this time, it’s the stock market frenzy. However, Plumb still believes in Nvidia’s long-term potential and expects a strong quarter ahead. He did mention they are not adding any new positions due to the ongoing volatility. Wise move, Tom!
Now let’s hear Nvidia’s side of the story. A spokesperson for the company emphasized the “high demand” for their advanced chips that often require ample time to build. They are in the process of juggling orders among their “wide range of customers” both in the U.S. and beyond. According to the spokesperson, these new export controls won’t have any significant impact in the near term. Phew, at least they’re putting up a brave face!
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Let’s rewind a bit and explore the roots of this issue. It all started when the Biden administration decided to impose export restrictions on the shipment of more AI chips, not just from Nvidia, but from other players as well. Their goal? To prevent China from acquiring cutting-edge U.S. technologies that could bolster its military power. Sounds like a plot straight out of a James Bond movie, if you ask me! These new rules are scheduled to take effect in November and encompass export controls to countries like Iran and Russia. Talk about geopolitics impacting the stock market drama!
But how did this drastic turn of events affect Nvidia’s stock? Thomas Hayes, the chairman at Great Hill Capital in New York, believes that Nvidia’s stock was priced for perfection. With a valuation of 20 times sales and 40 times earnings, any deviation from the expected trajectory could have severe ramifications. It’s like when you’re playing Jenga, and you remove that one crucial block that brings the whole tower crashing down. Let’s hope Nvidia’s stock doesn’t end up scattered on the floor!
And there you have it, folks! Nvidia’s chip cancellations, export restrictions, and stock price plummeting to new lows. The world of finance and technology always keeps us on our toes. Anything can happen, and the market has no shortage of surprises in store. Strap on your seatbelts and get ready for more twists and turns in this exhilarating rollercoaster ride!
Liked this article? Or do you think Nvidia’s stock has hit rock bottom? Share your thoughts and comments below! And remember, even in the wildest stock market storms, keep a cool head and hold on tight to your portfolio.
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