TLDR
- NVDA shares declined approximately 3% on Friday, closing near $177.83 after a previous close of $183.34.
- Investor sentiment was shaken by reports of proposed U.S. regulations mandating government authorization for almost all foreign sales of advanced AI chips.
- Nvidia reportedly paused H200 shipments to China to reallocate TSMC production capacity to its new Rubin platforms.
- Despite the share price drop, the company reported Q4 revenue of $68.13 billion, a 73.2% year-over-year increase that exceeded expectations.
- The analyst consensus price target is $273.64, supported by 47 Buy ratings and just 2 Hold ratings.
NVIDIA (NVDA) shares decreased by roughly 3% on Friday. The stock reached an intraday low of $176.82 before closing around $177.83, down from its previous closing price of $183.34. Trading volume was approximately 187.4 million shares, about 4% higher than the daily average.
The downward pressure was primarily driven by new reports concerning potential U.S. export controls. Officials are said to have prepared rules that would necessitate government approval for the vast majority of overseas sales of sophisticated AI chips.
The complexity of these regulations would depend on the size of the shipment. According to Bloomberg and Reuters, orders for 200,000 chips or more might require foreign investment in U.S. data centers or security assurances.
The Commerce Department indicated it was not reverting to the “AI diffusion” framework from the Biden administration, instead citing recent AI chip agreements in the Middle East as the future model.
However, those Middle East transactions faced challenges. The U.S. ultimately approved the sale of up to 70,000 advanced chips to companies in the UAE and Saudi Arabia, but only after months of delays related to investment talks and security issues.
This experience prompts questions about the potential speed of future deals if a comparable process is implemented worldwide.
China Headwinds Add to the Pressure
The company also encountered pressure from separate reports indicating it stopped H200 chip shipments to China. This decision was linked to shifting TSMC capacity to the next-generation Rubin platform, not a direct result of regulatory action.
Nevertheless, any decrease in shipments to China represents a near-term challenge for revenue, and the market responded to this news.
AMD (AMD) was also affected, falling about 3.52% on the same day. Both stocks have experienced weakness this year as investor excitement around the AI sector has moderated.
Strong Fundamentals Haven’t Gone Anywhere
This selloff occurred even though the company released a robust earnings report just weeks prior. Nvidia reported Q4 revenue of $68.13 billion, a 73.2% increase from the previous year, surpassing the consensus estimate of $65.56 billion.
Earnings per share (EPS) were $1.62, beating the $1.54 estimate. The net margin was 55.60%, and return on equity reached 97.37%.
Data center revenue achieved a record high. In reaction, analysts have been increasing their price targets; for example, Bank of America and Rosenblatt both raised their targets to $300, while Deutsche Bank set a target of $220.
The average price target from 53 analysts is $273.64, representing a significant premium to the current stock price.
CEO Jensen Huang recently noted that the company’s investments in OpenAI and Anthropic could be among its final stakes before those companies pursue public listings, suggesting fewer future equity investments.
Institutional investor interest continues to be solid. Norges Bank established a new position valued at approximately $62.2 billion in the fourth quarter. J. Stern & Co. increased its stake by more than 13,000%.
NVIDIA’s market capitalization is $4.32 trillion. The stock has a P/E ratio of 36.29 and a beta of 2.33.
The 50-day moving average is $186.02, and the 200-day moving average is $183.87, indicating that Friday’s closing price fell below both key technical levels.
