1 Stock to clear this week if you haven't already

Chipmaking giant NVIDIA (NVDA) has received restrictions on exporting its best chips to China. Additionally, the company's bleak fundamentals look concerning. Therefore, it might be wise to avoid NVDA now. Read on….

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Famous chipmaker NVIDIA Corporation (NVDA) has received restrictions on exports of two of its best chips to China. However, chief executive Jensen Huang still expects a big market for its data center chips in China. But export regulations for its A100 and H100 chips could affect up to $400 million in sales in the current fiscal quarter.

Furthermore, well-known investor Jim Cramer, who was a strong supporter of NVDA for a long time, recently turned the company's shares down following its Ethereum project.

He said, "They haven't been able to make the transition to artificial intelligence, virtual reality, machine learning yet. We're just not there yet. So we have elements high tech that aren't there yet that are generating revenue and the lower stuff hurt by this Ethereum transfer."

The stock is down 44.6% over the past year and 58.4% year-to-date to close its last trading session at $122.28. It's down 21.5% from last month.

The following factors could affect NVDA's performance in the short term:

Dark result

For the second fiscal quarter that ended July 31, NVDA's revenue increased 3% year-over-year to $6.70 billion. However, non-GAAP net income fell 50.7% from the year-ago quarter to $1.29 billion. Non-GAAP net earnings per share decreased 51% from the same prior year period to $0.51.

Extended Assessments

In terms of EV/Futures, NVDA is trading at 11.30x, which is 375.5% higher than the industry average of 2.38x. The stock's forward EV/EBITDA multiple of 49.12 is 322.1% higher than the industry average of 11.64. In terms of price/sales futures, NVDA is trading at 11.49x, which is 368.1% higher than the industry average of 2.46x.

Unfavorable analyst expectations

Consensus EPS estimates of $0.71 and $0.79 for the quarters ending October 2022 and January 2023 indicate year-over-year declines of 39.3% and 40.2% . Street EPS estimate for the current fiscal year (ending 2023) of $3.37 reflects a 24.1% decline from the prior year.

Consensus revenue of $6.21 billion for the quarter ending January 2023 indicates an 18.7% year-over-year decline.

POWR ratings reflect gloomy outlook

NVDA's POWR ratings reflect this bleak outlook. The stock has an overall rating of D, which is equivalent to Sell in our proprietary rating system. POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

NVDA has a growth and value rating of D in line with its low growth and high valuations. The stock has a stability rating of D, consistent with its five-year monthly beta of 1.69.

In the semiconductor and wireless chip industry, which has 92 stocks, it is ranked No. 77.

Click here to see additional POWR ratings for NVDA (Momentum, Feeling, and Quality).

Discover all the best in the semiconductor and wireless chip industry here.

Conclusion

Export regulations on NVDA's fastest chips could hurt the company's bottom line. Additionally, the decline in its bottom line in the last reported quarter is concerning. With analysts bearish on the company's outlook, its stock may be best avoided.

How does NVIDIA Corporation (NVDA) compare to its peers?

Although NVDA has an overall POWR rating of D, one might consider looking at industry peers STMicroelectronics N.V. (STM) and Advantest Corporation (ATEYY), which have an overall A (Strong Buy) rating, and United Microelectronics Corporation (UMC) and MaxLinear, Inc. (MXL),...