NVIDIA (NVDA) Stock Price Dropped On Tuesday
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Summary:
- The Biden administration's decision to limit electronics exports to China last week.
- Citigroup reduced Nvidia's price objective by $38 to $210 per share.
Nvidia (NVDA) share price drops due to biden administration
Following the Biden administration's decision to limit electronics exports to China last week, Nvidia (NVDA) led chip stocks lower on Tuesday amid a flurry of analyst downgrades and broader sector repricing.
Late last week, Advanced Micro Devices (AMD) issued a warning regarding near-term revenue growth, and weakening PC and smartphone demand also put pressure on already-weak chipmakers. Additionally, President Joe Biden's decision to severely restrict the sale of equipment to China-based companies used in the production of advanced semiconductors gave further downside momentum.
In the United States, Intel also suffered as a result of analysts at Wells Fargo lowering their price target on the chipmaker and noting a steep drop in near-term sales amid broader sector weakness.
In contrast, Citigroup reduced Nvidia's price objective by $38 to $210 per share due to slowing growth rates in the market for cloud computing hardware. Nvidia shares fell 2.4% in early Tuesday trading to trade at $113.85 per share.
The Biden administration announced further extensive restrictions on the sale of semiconductors and related equipment to China on Friday. Then, today, the International Monetary Fund (IMF) lowered its projection for global growth, hurting morale as well. And to top it all off, the Chinese government has decided to lock down major cities once more in an effort to stop the spread of COVID-19, which has recently caused supply chain issues.
The new limits on high-end processor sales to China could notably hurt Nvidia. Although the administration had already ordered Nvidia to stop selling its top-tier data center GPUs to China back in late August, the administration's latest limitations on equipment sales to China last week only serve to further cement the two nations' technical separation. It's important to note that Nvidia estimated that the limits would affect around $400 million in revenue, or about 7% of projected revenue, if they were completely enforced.
NVDA Price Chart
Sources: finance.yahoo.com, thestreet.com, fool.com
