NVIDIA Valuation Hits AI Era Low, But Investors Hesitate to Buy the Dip

NVIDIA's stock is nearing its lowest valuation since the advent of the AI era, but increasing risks are making investors cautious about buying the dip. The latest blow for the chipmaker is a $5.5 billion loss due to chip trade restrictions. This news has heightened concerns that spending on artificial intelligence might slow down, especially as the escalating trade war casts further shadows on the overall economic growth outlook.

Krishna Chintalapalli, Portfolio Manager and Director of Technology Sector at Parnassus Investments, stated: “The outlook is not as convincing as it was before, and you really have to make a lot of assumptions about tariffs, hyperscale enterprises, and the macroeconomy.” “Because all these factors are piling up, the uncertainty is much higher than before.” Chintalapalli considers the stock's valuation to be reasonable but adds: “If you want to buy here, you might be betting on the hyperscale demand for AI.” “While the intent to invest in AI is there, they always slow down on the margins,” “Considering macroeconomic and tariff issues, you can't predict the pace of investment.”