Nvidia Stock Takes a Hit on Export Worries and Dismal Earnings

Nvidia, the Silicon Valley titan (NVDA), hit a bump on Wall Street Tuesday. The stock saw a dip of over 5%, partially pulling back from its impressive two-week rally. On Monday, it hit a record high, scribbling a new chapter in its success story. Still, the tech wave was interrupted by unsettling news – a move that anyone tuned into the stock market (or the subway) couldn’t miss.

Export Worries Rock the Boat

Before the clang of the opening bell, investors got jittery. The buzz started with Bloomberg’s report about the Biden administration’s plans. The gossip? New export regulations on US chips. Some sources, who preferred to stay in the shadows, whispered these would target Persian Gulf countries, citing national security. The rumor mill didn’t just hammer Nvidia. Fellow chipmakers like Advanced Micro Devices (AMD) and Intel (INTC) felt the burn too.

ASML’s Rumble Doesn’t Help

As if that wasn’t enough, the woes piled on with ASML’s bleak earnings. This Dutch gem sells gear to top names like TSMC and Intel. But their reported orders of a mere €2.6 billion? Roughly $2.8 billion in our lingo – not even close to the €5.39 billion forecast from Wall Street’s sharp minds tracked by Bloomberg. The numbers were way below the line and certainly didn’t lend a helping hand to chip stocks. In fact, Tuesday saw the PHLX semiconductor index (^SOX) nose-dive by 4.4%, a steep dip compared to the S&P 500’s (^GSPC) modest 0.5% midday drop.

A Bit of Good News: Nvidia’s Meteoric Rise

Before Tuesday’s drama, Nvidia was surfing on a wave of victories. Its shares even flirted with overtaking Apple (AAPL) as Wall Street’s crown jewel. Monday saw shares closing above $138, zipping past its past record from June. The charge? News of sky-high demand for AI chips. Of course, AI buzz was its fuel.

Let’s not forget Nvidia’s 10-for-1 stock split back in June; it stirred volatility. Combine this with heightened trade tensions circling the AI chip sector, and you’ve got a recipe for ebbs and flows. Just last year, Nvidia shares tumbled for similar reasons. The Biden administration had tightened chip exports then as well, only for Nvidia’s stock to roar back.

Geopolitical Concerns and Future Forecasts

Despite this hiccup, Nvidia’s fortunes this year have been nothing short of stellar – shares are up a towering 186% from the year prior. However, there’s always the lurking shadow of geopolitical tensions and potential austerity in AI spending. DA Davidson’s Gil Luria noted a possible cooling in AI expenditures by the tech behemoths as soon as 2025. For Nvidia investors, such a slowdown spells trouble.

Credit: AP Photo/Jeff Chiu, File (ASSOCIATED PRESS)

Upcoming Earnings and Analyst Recommendations

Looking forward, Nvidia is set to report its earnings on Nov. 19. With Wall Street’s sharp-eyed analysts anticipating revenue of around $33 billion, that’s an 82% jump from last year. Out of those analysts, approximately 90% think Nvidia is a smart buy.

For those thirsty for the last helping of today’s stock market musings, catch Yahoo Finance’s detailed reports. Laura Bratton, one of Yahoo’s finance mavens, regularly spills the beans on X @LauraBratton5. Stay tuned – the market’s landscape is changing faster than a yellow cab in Midtown.