Nvidia struggles despite strong earnings, facing challenges with high valuation and growth expectations

From Nasdaq: 2024-12-20 04:25:00

The U.S. presidential election has boosted the stock market, with the S&P 500 rising by 5%. However, Nvidia (NASDAQ: NVDA) has declined by more than 6% since Nov. 5, a departure from its usual growth trajectory as a top growth stock.

Nvidia’s strong earnings report, with sales nearly doubling to $35 billion, didn’t lead to a surge in stock value. The stock, trading at over 50 times its trailing earnings, faces high expectations, potentially hindering significant growth.

Nvidia’s stock may have hit a ceiling, struggling to surpass the $150 mark since Nov. 21. The company faces challenges like increasing competition in custom AI chips and an antitrust investigation in China, potentially impacting future growth.

Investors interested in Nvidia for the long term may see a bullish case due to the company’s leadership in AI chips. However, high valuation and potential market slowdowns could lead to stock price pushback and vulnerability to corrections in the future.

The Motley Fool analysts didn’t include Nvidia in their 10 best stocks to buy now. While Nvidia has potential for long-term growth, investors should be prepared for headwinds and stock declines in an overheated market that may be due for a correction.



Read more at Nasdaq: The S&P 500 Has Been Rallying Since the U.S. Election but Nvidia Has Been Struggling. Is It a Sign the Stock May Have Finally Peaked?