Nvidia Stock Is Back at $200. What History Suggests Is the Floor.

Components of a Nvidia Corp. GB3000 GPU on display. (An Rong Xu/Bloomberg)

Key Points

Nvidia shares trade around $200 as midterm election results cast doubt on the artificial-intelligence buildout.
Investors worry that potential data-center delays for customers like SpaceX and CoreWeave will eventually reduce Nvidia chip purchases.
Historically, Nvidia stock has not fallen below $190 since first breaking through $200 in April.

Nvidia shares are at levels it hasn’t seen in three months. But the chip company’s recent track record suggests it might be bottoming out soon.

Nvidia stock was down 0.9% at $198.34 in premarket trading Thursday. If the move holds, it will be the first time it has closed below $200 since July 30.

It’s no mystery as to why—the tide of Democrat victories in midterm elections has cast doubt on the artificial-intelligence buildout. And while it’s Nvidia’s customers such as SpaceX and CoreWeave which are in the immediate firing line of any data-center delays, investors are concerned that will eventually translate into reduced chip purchases.

But the immediate reaction might be going too far. Remember that Nvidia has forecast 70% revenue growth for its fiscal 2028 year (as Nvidia’s fiscal year ends in January, this is largely the same as a 2027 forecast), which it said was limited by supply rather than demand. Any delayed data-center projects could just mean chips being directed to alternative customers, either in other states or overseas.

“The U.S. is a very large place. And so if the new governors do make it impossible to build new data centers… then these tech companies, in my opinion, will look to build elsewhere,” said Gavekal U.S. chief economist Will Denyer. “And there will always be some state and some county who is willing to welcome data centers and the tax revenue that come with it.”

It’s also worth thinking about Nvidia’s valuation. It now trades at a forward price-to-earnings multiple of around 14 times according to FactSet. That’s well below the 18.45 times multiple for the S&P 500 as a whole despite a far superior growth outlook to the average company and enormous stock buybacks.

Nvidia is no stranger to pullbacks. Since first breaking through $200 in April, it has fallen below that level on multiple occasions. However, it hasn’t fallen lower than $190 and has generally risen in the few weeks ahead of its quarterly earnings—which are set to be released on Nov. 17.

The next couple of weeks should see a steady stream of Wall Street previews of Nvidia’s earnings, which could set a new average price target, which is currently sitting at about $333, according to FactSet. That could help set a floor under the stock.

Write to Adam Clark at adam.clark@barrons.com

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