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Nvidia Stock Falls Below $180: Is It a Bargain Buy?
Key Points
Nvidia is reportedly investigating an affair involving CEO Jensen Huang and a potential Chinese spy.
The market appears to be pricing in slower growth and greater uncertainty ahead for Nvidia, causing its share price to fall.
The stock could soon hit a new 52-week low.
After years of tremendous gains, 2026 is proving to be a much more challenging one for chip giant Nvidia (NASDAQ:NVDA). Heading into this week, the stock has been flat, and news that CEO Jensen Huang has been involved in an affair with a Chinese spy has sparked new concerns about governance and potential government repercussions.
The stock has been struggling mightily of late and may soon hit a new 52-week low. Is Nvidia really in trouble, or is the market overreacting, and could this instead be a great buying opportunity for investors?
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The market is pricing in a more bearish outlook
Prior to this week, the big concerns around big tech were that the recent midterm election results might result in greater pushback on data centers and artificial intelligence (AI) spending as a whole. If that happens, then Nvidia, whose chips are front and center in AI development, could see its growth rate fall significantly.
Now, however, there are also concerns that Huang's relationship with a Chinese spy might open up a whole new can of worms. The tech company is looking into the matter, and there may be possible blowback from the government as well, which has been highly restrictive of the types of chips that can be sold to China.
While there's no doubt that Nvidia's business has experienced tremendous growth due to AI, the market appears to be pricing in greater uncertainty and risk ahead. The big question for investors is whether these risks are exaggerated, and if the stock is worth buying at these reduced levels.
Nvidia's stock looks cheap, but it does come with risks
Due to Nvidia's decline in value and impressive growth, it's now trading at a forward price-to-earnings multiple of just 12, which is based on analyst expectations. It's an incredibly low price tag for such a top growth stock. However, it also depends on the company continuing to grow at a fast pace.
There's some risk here due to that, but overall, I'm not overly concerned about the spying scandal. Any mistake Huang may have made was likely just that -- a mistake; not something worthy of a serious reprimand from either the government or the company itself.
Buying the stock on this decline in value could be a great move for long-term investors, as Nvidia's chips remain in high demand and with fantastic margins, the business still looks poised to be a top stock to own for many years to come.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.