Nvidia’s (NVDA) stock price continued to drop on Tuesday due to reports of potential delays in the production of its AI Blackwell chips. In addition, a Bloomberg News report about the possibility of new export rules from the Trump administration, as well as macroeconomic uncertainty and inflation fears, have not helped either.
Unsurprisingly, the Trump administration is considering tighter export rules on the chip sector to restrict China’s AI progress, a move that could impact Nvidia’s sales. Additionally, Nvidia’s Blackwell chips have faced overheating issues and glitches, which led top customers like Microsoft (MSFT), Amazon (AMZN), Google (GOOGL), and Meta (META) to cut their orders, as reported by The Information in December. It is worth noting that these customers alone purchased an estimated $44 billion worth of Nvidia GPUs in the 2024 calendar year, therefore making their reduced spending a big deal.
Furthermore, according to five-star Evercore ISI analyst Mark Lipacis, Nvidia’s ramp-up of its Blackwell AI chips could be delayed until mid-2025 instead of the first half of 2025. These chips have already been delayed before, and another delay may cause investors to get nervous. Nevertheless, Lipacis noted that demand for Nvidia’s GPUs still outstrips supply, and he believes that customers will likely purchase Nvidia’s H100 chips in the meantime instead of waiting for the Blackwell chips, which could help mitigate the impact of the delay on Nvidia’s sales.
Is NVDA a Good Stock to Buy?
Overall, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 33 Buys and two Holds assigned in the past three months. After a 62% rally in its share price over the past year, the average NVDA price target of $177.87 per share implies an upside potential of 38.6% from current levels.
