Nvidia has recently experienced a series of negative news, with its stock price falling more than 17% in nine trading days and its market cap evaporating nearly $550 billion, causing significant turbulence in the US stock market.

According to Bloomberg data, Nvidia's 30-day volatility has reached its highest level since mid-2022.

Many Wall Street institutions have coincidentally raised the soul-searching question: Is now a good time to buy Nvidia at a discount?

Analysis of the reasons for Nvidia's pullback

1. Antitrust risk

On September 4, Bloomberg cited insider sources as saying that the US Department of Justice has issued subpoenas to Nvidia and some third-party companies, seeking evidence of Nvidia's violation of antitrust laws. The regulators are seeking information on Nvidia's acquisition of RunAI and its chip business.

On September 6, Nvidia responded that it had made inquiries to the US Department of Justice but had not yet received any subpoenas. Nvidia stated that the company will win based on its strength, and customers can choose the solution that suits them best. The company is happy to answer any questions from regulatory agencies about its business.

Although Nvidia has denied it, the continuous reports in the past year have shown that the US government is tightening regulations in the AI field, which undoubtedly casts a shadow on Nvidia's future.

2. Concerns about delays

Previously, according to The Information, Nvidia's upcoming AI chips may be delayed by three months or even longer due to design flaws, and Blackwell's mass production may be postponed until Q1 of next year. This could affect customers such as Meta, Google, and Microsoft, who have collectively ordered billions of dollars' worth of chips.

Morgan Stanley believes that the production of Blackwell chips may be suspended for about two weeks, but efforts by Taiwan Semiconductor could catch up by Q4 2024.

After Nvidia announced its performance, Huang Renxun responded positively to the delay issue of Blackwell:

He said, "Blackwell has started mass production and will be shipped in the fourth quarter."

However, due to the unprecedented computational and power density of the Blackwell series chips, their design complexity will face huge challenges at the manufacturing process level. In terms of packaging alone, Blackwell packaging is the first large-scale design that adopts TSMC's CoWoS-L technology. TSMC's yield and capacity have raised concerns about delayed shipments.

3. Performance concerns

Nvidia expects Q3 revenue to be $32.5 billion, with a range of +/-2%, or $31.85 billion to $33.15 billion, higher than analysts' average expectations. However, the market's highest expectation for Nvidia's Q3 revenue reached $37.9 billion, which has raised concerns about its explosive growth weakening. It is worth noting that this performance guidance also means that revenue growth in the third quarter is expected to be up to 83%, the first time in nearly six quarters that it is below 100%.

In addition, Nvidia has not provided a clearer guidance on capital expenditure and return on investment, which will influence the market's long-term confidence in technology giants betting on AI.

Ken Mahoney, CEO of asset management firm Mahoney Asset Management, stated that the "angry reaction" to Nvidia's financial report shows that after witnessing a more than 700% surge in its stock price since early 2023, investors have become accustomed to Nvidia's financial reports not only exceeding market expectations, but also "completely destroying" them, which makes Nvidia's stock price "perfectly priced" with limited room for error.

Bill Maurer, a columnist for the investment research website Seeking Alpha, believes that Nvidia's drop in stock price after the financial report is a result of "digesting some growth worries".

Due to its stock price doubling in the past year, investors and analysts had high expectations, resulting in the smallest deviation from market expectations in terms of revenue and profit in the latest financial report, reflecting the immense challenge of meeting continuously rising expectations.

4. Industry cycle rotation and weak chip sales

Another important reason for the increased selling pressure on Nvidia is that the semiconductor industry is showing clear late-cycle characteristics - the market believes that demand remains strong, and Nvidia's Q3 guidance is also positive, but the market's response to the good news has been weak.

Morgan Stanley stated that Nvidia's market response suggests that the current industry cycle is close to its peak. The semiconductor industry reaches a supply-demand balance every two years or so, and for the next phase of trading, the key point is whether AI demand will be released ahead of schedule before 2025-2026.

In addition, the Semiconductor Industry Association (SIA) released July chip sales data earlier, which was below seasonal trends and also showed signs of industry weakness.

UBS analyst Timothy Arcuri analyzed that chip sales in June and July dropped by 11.1%, below the 5-year and 10-year average levels.

Arcuri pointed out:

"Memory is the main downward factor, including MCU (microcontrollers), DSP (digital signal processors), and analog chips. The decline in the main sub-markets is worse than their respective seasonal trends of the past 5 years and 10 years."

5. Pelosi's shareholding doubts

Jason A. Williams, an active investor on X, posted on Tuesday that Pelosi sold her Nvidia stocks before the stock plunged. Although the post spread quickly on social media platforms, the information in it is clearly inaccurate, as no such transactions have been found by the US authorities, and Finbold's Congressional Transaction Tracker did not detect any.

Some netizens have discovered that Williams' post seems to be quoting another user, Mike Alfred's tweet, which Alfred deleted after realizing the mistake.

Although the current public information shows that Pelosi still holds her Nvidia stocks, some obvious flaws in the disclosure system may lead to changes in the situation in the coming weeks: Politicians have a 45-day grace period before they are required to disclose their trading activities, most of which involve stocks worth between $1 million and $5 million.

However, Huang Renxun sold $27.6 million worth of Nvidia stocks at the end of August and the beginning of September, which has still shaken the confidence of shareholders.

Wall Street bulls and bears debate.

For the future of Nvidia, there are differing opinions between the bulls and bears on Wall Street.

Michael Kirkbride, portfolio manager at Evercore Wealth Management, stated that Nvidia's stock is facing the issue of having few foreseeable events that could bring positive momentum in the future.

We are currently in a blank period as the earnings season has ended. This month, there will be a large amount of economic data released, which has led to a lot of caution. When you are in a trading vacuum, the market becomes very short-term and turns into a proactive selling market.

UBS Group's global asset management analyst also stated that some investors have started to question the investment returns on Nvidia:

Now investors are starting to question whether investment returns will be realized. When they see that some macroeconomic data is not as strong, they become a bit nervous. Therefore, there is now a question of whether the enthusiasm for investing in cloud computing will continue.

However, there are still many voices supporting Nvidia and AI chip stocks.

After Nvidia's sell-off, Wedbush Securities analyst Daniel Ives came out in support of Nvidia.

To put it simply, Nvidia has already changed the technology and global landscape, as its GPU has become the new oil and gold in the IT field. Its chips are driving the AI revolution and are currently the only choice.

Piper Sandler机构分析师Harsh Kumar承认英伟达的业绩报告没有完全达到投资者的预期，但他仍然看好英伟达。

他指出，市场对英伟达Hopper芯片的需求强劲，预计在财年下半年将进一步增长。同时，Blackwell芯片的收入基本步入正轨。

Dear mooer,

英伟达目前调整到位了吗？

你会选择抄底还是观望？欢迎讨论

Editor/Lambor