Nvidia (NVDA) Shares Drop 9% in One Month – Is Now the Time to Buy?

TLDR

• NVDA stock is down nearly 9% over the past month and is up just 5% year to date, trading at roughly $192.53.
• The stock now trades at about 22 times forward earnings, down from about 40 times last July
• Generate Investment Management increased its stake in NVDA by 62.5% in the first quarter, making it the largest holding at approximately 11.9% of the portfolio.
• Wall Street has a consensus rating of Buy with an average price target of $303.84
• NVDA reported first-quarter earnings per share of $1.87, beating estimates of $1.76, with revenue rising 85.2% year over year to $81.61 billion.

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Nvidia stock opened Friday at $192.53, extending a brutal rally that has seen the chip giant lose nearly 9% over the past month. Year to date, NVDA stock is up just 5% — a far cry from the massive gains investors have become accustomed to in previous years.

Nvidia Corporation, NVDA

The forward earnings multiple has also been compressed. NVDA now trades at about 22 times forward earnings. This compares to nearly 40 times more in late July of last year. On paper, that sounds like a discount. But whether this is actually the case depends on how you read the broader picture.

One thing works in a bullish situation: Institutional money doesn’t run away. Increase its investment management generation NVDA rose 62.5% in the first quarter, adding more than 533,000 shares to bring its total to nearly 1.39 million. The stake is now worth about $241.7 million and represents 11.9% of its portfolio – its largest single holding.

Other big names have been added as well. Norges Bank has acquired a new stake worth approximately $62.2 billion. J. Stern & Co. By strengthening its position by more than 13,700%. Cardano Risk Management increased its stake by 896%. Institutional investors now own 65.27% of the company.

What do the numbers say?

Nvidia The last quarter was strong by all standards. The company reported first-quarter EPS of $1.87, beating the consensus estimate of $1.76. Revenues were $81.61 billion, exceeding the expected $78.42 billion, and an increase of 85.2% compared to the same quarter last year.

The board also approved an $80 billion stock buyback and raised its quarterly dividend to $0.25 – up from $0.01 previously. This is a major shift in capital return strategy.

Wall Street remains broadly positive. Jefferies raised its price target to $300. CICC raised its target to $268.30. The consensus among 54 analysts stands at buy, with an average target of $303.84 – well above Friday’s opening price.

That’s where caution comes in

Not everything points up. Multiple compression tells a story beyond just “it’s cheaper now.” Hardware companies are cyclical, and margins can erode as competition increases. Alternative chip makers and in-house AI silicon from major cloud providers are increasingly entering the space.

There is also indoor activity worth noting. Director Mark Stevens sold 885,000 shares on June 18 at an average price of $210.17, for a total of about $186 million. This represents a 14.53% reduction in his position. Director John Dabiri sold 625 shares in late May at $214.

Insiders sold more than 1.9 million shares worth roughly $410.6 million in the last three months. This doesn’t automatically indicate a problem, but it’s worth keeping an eye on.

One technical model suggests that NVDA could trade between $190 and $225 over the next 10 weeks from current levels, with a five-week average target of around $213. The stock has recorded only four weeks in the last 10 weeks.

NVDA has a 52-week range of $151.49 to $236.54, a market cap of $4.66 trillion, and a 200-day moving average of $193.00 – near where it is now.