NVIDIA (NASDAQ:NVDA) Shares Gap Down - What's Next?

Key Points

• NVIDIA shares fell sharply, opening at $173.07 after closing at $186.64 and trading around $178.50, a reported 6.2% decline.
• Investors face uncertainty from an ongoing board investigation involving CEO Jensen Huang and reported ties to Megaspeed, alongside potential legal and reputational scrutiny and growing competition from Google’s AI chips. NVIDIA’s board said it has no reason to believe sensitive information or national security was compromised, and Huang is cooperating.
• Analysts remain broadly bullish, with a consensus “Buy” rating and an average target of $318.85; NVIDIA also announced a collaboration to develop South Korea’s sovereign AI infrastructure.

Shares of NVIDIA Corporation (NASDAQ:NVDA - Get Free Report) gapped down prior to trading on Monday. The stock had previously closed at $186.64, but opened at $173.07. NVIDIA shares last traded at $178.50, with a volume of 126,989,905 shares changing hands.

Key Headlines Impacting NVIDIA

Here are the key news stories impacting NVIDIA this week:

• Positive Sentiment: NVIDIA, Rebellions and SK Telecom announced a collaboration to develop South Korea’s sovereign AI infrastructure, expanding NVIDIA’s role in the region’s AI data-center ecosystem. Article: NVIDIA, Rebellions and SK Telecom collaboration
• Positive Sentiment: Royal Bank of Canada and Goldman Sachs reaffirmed positive ratings, with reported price targets of $330 and $300, respectively. These calls suggest some analysts see substantial upside despite the current uncertainty. Article: NVIDIA analyst ratings
• Neutral Sentiment: The board says it has no reason to believe sensitive company information or national security was compromised; Huang is cooperating with the independent review. Those assurances may limit concerns, but the investigation is ongoing. Article: NVIDIA board statement
• Negative Sentiment: The board’s probe follows reports that Huang had a relationship with an executive at Singapore-based Megaspeed, whom U.S. officials suspect of links to Chinese intelligence. Investors face uncertainty over potential security implications, disclosures and Huang’s future at the company. Article: NVIDIA investigation and Huang
• Negative Sentiment: Political and regulatory scrutiny could deepen: a report says a Commerce Department chip inquiry involving Megaspeed was transferred to the Justice Department after an NVIDIA executive contacted Commerce officials. This adds another potential source of legal and reputational risk. Article: Commerce Department chip inquiry
• Negative Sentiment: Competitive pressure is also in view as Google rolls out AI chips positioned to challenge NVIDIA, while investors are already weighing uncertainty about AI spending and chip valuations. Article: Google’s new AI offerings

Wall Street Analysts Forecast Growth

NVDA has been the subject of several analyst reports. Stifel Nicolaus set a $315.00 target price on NVIDIA in a research report on Thursday, August 27th. Oppenheimer set a $315.00 price target on NVIDIA and gave the company an "outperform" rating in a research report on Thursday, August 27th. Royal Bank Of Canada reiterated an "outperform" rating and issued a $330.00 price target on shares of NVIDIA in a research report on Monday. JPMorgan Chase & Co. increased their price objective on NVIDIA from $280.00 to $320.00 and gave the stock an "overweight" rating in a research note on Thursday, August 27th. Finally, HSBC lifted their price objective on NVIDIA from $360.00 to $365.00 in a report on Thursday, August 27th. Five equities research analysts have rated the stock with a Strong Buy rating, forty-eight have given a Buy rating and one has given a Hold rating to the company. According to MarketBeat, the company presently has a consensus rating of "Buy" and a consensus target price of $318.85.

NVIDIA Trading Down 6.2%

The company's fifty day moving average price is $219.80 and its two-hundred day moving average price is $204.53. The company has a quick ratio of 3.85, a current ratio of 4.59 and a debt-to-equity ratio of 0.14. The company has a market cap of $4.22 trillion, a price-to-earnings ratio of 22.10, a price-to-earnings-growth ratio of 1.43 and a beta of 2.21.

NVIDIA (NASDAQ:NVDA - Get Free Report) last announced its earnings results on Wednesday, August 26th. The computer hardware maker reported $2.22 EPS for the quarter, topping the consensus estimate of $2.09 by $0.13. The business had revenue of $96.22 billion for the quarter, compared to the consensus estimate of $92.27 billion. NVIDIA had a return on equity of 96.04% and a net margin of 63.66%. NVIDIA's revenue was up 105.9% compared to the same quarter last year. During the same period in the previous year, the business earned $1.05 EPS. Research analysts expect that NVIDIA Corporation will post 9.30 earnings per share for the current year.

NVIDIA Announces Dividend

The firm also recently disclosed a quarterly dividend, which was paid on Thursday, October 1st. Shareholders of record on Thursday, September 10th were paid a $0.25 dividend. The ex-dividend date of this dividend was Thursday, September 10th. This represents a $1.00 dividend on an annualized basis and a yield of 0.6%. NVIDIA's payout ratio is currently 12.64%.

NVIDIA declared that its board has approved a share repurchase program on Monday, September 28th that allows the company to buy back $150 billion in outstanding shares. This repurchase authorization allows the computer hardware maker to buy up to 2.8% of its shares through open market purchases. Share repurchase programs are generally a sign that the company's board believes its shares are undervalued.

Insider Activity

In other news, EVP Timothy Teter sold 30,460 shares of the firm's stock in a transaction on Monday, September 21st. The stock was sold at an average price of $222.80, for a total value of $6,786,488.00. Following the completion of the sale, the executive vice president directly owned 2,687,660 shares in the company, valued at approximately $598,810,648. This trade represents a 1.12% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Colette Kress sold 34,918 shares of NVIDIA stock in a transaction dated Thursday, September 17th. The shares were sold at an average price of $219.05, for a total value of $7,648,787.90. Following the completion of the transaction, the chief financial officer directly owned 765,103 shares of the company's stock, valued at $167,595,812.15. This represents a 4.36% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders sold 1,766,118 shares of company stock worth $399,450,353. 3.94% of the stock is owned by corporate insiders.

Institutional Trading of NVIDIA

Several hedge funds have recently modified their holdings of the stock. Intelligent Financial Strategies acquired a new position in NVIDIA during the 3rd quarter worth approximately $26,000. Montgomery Financial Services LLC bought a new stake in shares of NVIDIA in the second quarter valued at about $28,000. Langley Wealth Management LLC acquired a new stake in NVIDIA during the second quarter worth approximately $34,000. Newton One Investments LLC bought a new position in NVIDIA in the 3rd quarter valued at about $34,000. Finally, Phillip James Consulting Co. acquired a new position in shares of NVIDIA during the 1st quarter worth $40,000. 65.27% of the stock is owned by institutional investors.

About NVIDIA

NVIDIA Corporation develops graphics processing units (GPUs), accelerated computing platforms and related software. Founded in 1993, the company first became widely known for GPUs used in PC gaming and professional graphics. Its technology now also supports artificial intelligence, scientific computing and other data-intensive applications.

NVIDIA's offerings include GeForce products for gaming, data-center GPUs and systems for AI workloads, and networking products that connect computing infrastructure.

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