By May 15, investors will know whether Trump intends to loosen those rules. "Once the geopolitical concerns are sized and priced, we expect Nvidia to recover," Arya wrote. He likened the situation to what's been seen with chip-equipment stocks, which were weighed down by concerns about exposure to China but saw a "relative recovery" once investors got more information about equipment spending.
Even so, investors seem downright bearish on AI right now, according to Jordan Klein, a tech- and media-sector sales specialist at Mizuho Securities. He wrote that the sentiment around AI semiconductor and hardware stocks was as bad as he could remember over the last year.
"Maybe that is not saying much after the past four weeks and the meltdown that has come fast and furious," Klein said in a note to clients. "But this is why Nvidia stock is able to sell off 7% intraday and trade at 20 times [price to earnings] and no one seems inclined to rush to buy." He was referring to Wednesday's price action; Nvidia's stock is down fractionally on Thursday.
Last week, the "death cross" pattern appeared in Nvidia's stock chart for the first time in three years. The death cross is seen by technical analysts on Wall Street as a bearish marker and one that graduates to a longer-term downward trend.
Nvidia's stock touched as low as $104.77 on an intraday basis earlier in March, and it staged several closes near $100 last summer. Investors seem concerned Nvidia's stock could "retest" the $100 level or below, according to Klein.
With Nvidia shares trading at about 20 times estimated earnings for the next calendar year, Arya noted that that multiple is well below the median forward level of about 36 times.
But investors continue to worry about the swirl of events, many of them geopolitical. China is enacting its own import restrictions, putting energy-efficiency rules in place that may make it harder yet for Nvidia to sell chips into that market.
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