Key Takeaways
- NVIDIA stock fell 11% in October as Intel’s weak outlook, Alphabet’s push into selling its own AI chips and worry over who pays for AI data centers hit chip stocks.
- None of the selling came from NVIDIA’s own numbers, and analysts’ earnings estimates have held flat or edged up since the end of September.
- The main risk is that NVIDIA increasingly backs its own buyers, and just five direct customers owed 70% of its receivables in late July.
- The stock’s forward P/E hit a new five-year low on Friday, and it looks like a buy ahead of NVIDIA’s Nov. 17 report.
NVIDIA (NVDA) stock fell 11% in October, and very little of the bad news came from NVIDIA itself.
Most of it came from Intel (INTC) and Alphabet (GOOG), along with growing worry over who pays for the AI buildout. Investors sold chip stocks across the board.
Selling on Everyone Else’s News
On Oct. 14, a hot inflation report and a 15% drop in CoreWeave, an AI cloud that rents out NVIDIA chips, hit chip stocks. On Oct. 22, the day NVIDIA fell 4.4%, CEO Jensen Huang told CNBC that neocloud demand is “off the charts,” but capital is scarce.
Then Alphabet reported on Oct. 28. Sales of its own AI chips, which it once kept for itself, were a meaningful contributor to its growth. But its capital spending more than doubled to $51.4 billion and free cash flow turned negative, which raised fresh worries about AI’s costs. Its stock fell 19% in October.
That’s a rival chip from a big NVIDIA buyer. But NVIDIA grows fastest with customers that don’t have chips of their own. Sales to AI clouds, industrial and enterprise buyers reached $40.3 billion in the July quarter, up 138% from a year earlier and 25% from the quarter before. That’s nearly double the 13% sequential growth from hyperscalers.
Intel landed the biggest blow after the Oct. 29 close. It guided fourth-quarter revenue to $15 billion to $16 billion, below the $17.1 billion analysts polled by LSEG expected, and NVIDIA fell 5% the next day. Intel stock fell 47% in October, and the Nasdaq 100 fell 7%.
Intel’s problem is PCs. “We see the PC slowdown continuing at least through the first half of next year,” CFO David Zinsner said in Intel’s third-quarter release. Intel also said its data center revenue grew at its fastest pace in 15 years in the third quarter. NVIDIA’s whole graphics segment, PCs included, was about a tenth of its revenue in the year ended January 2026.
And analysts still expect NVIDIA’s normalized earnings per share to more than triple, from $4.77 in the year ended January 2026 to $15.91 two years later:
Those estimates have held flat or edged up since the end of September, and I see nothing in Intel’s PC warning to change that.
TIKR Tracks 62 Analysts on NVIDIA. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on NVIDIA, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See NVIDIA’s Analyst Ratings
The Worry Is Who’s Paying
NVIDIA increasingly backs its own buyers. It is putting $3 billion into Meta Platforms’ share sale, announced Oct. 26, and Meta plans to expand its use of NVIDIA hardware in return.
At the end of July, just five direct customers owed 70% of NVIDIA’s receivables, which had climbed to $63.1 billion from $38.5 billion in January. If lenders pull back from those buyers, NVIDIA could be left holding more of their risk.
Demand isn’t the issue. In August, CFO Colette Kress guided fiscal 2028 revenue growth of about 70% and called it “a supply-constrained outlook.” Palo Alto Networks CEO Nikesh Arora said this month that “you talk to Jensen, he can’t give you chips for 2028.”
NVIDIA Stock Is Cheaper Than It’s Been in Years
Investors are paying less for NVIDIA’s earnings than they have in years:
Its forward P/E was 17.7x on Oct. 29, near the five-year low of 17.4x it hit on Oct. 23, and well under its five-year average of 36.1x. Friday’s 5% drop took it to about 16.8x, a new low.
Wall Street’s average price target of $329 is about 62% above Friday’s close.
I’d load up. NVIDIA is being sold on Intel’s PC slump and the AI trade’s jitters while its customers wait in line for chips. Under 17x forward earnings is a low price for that much growth.
NVIDIA reports on Nov. 17. It guided October-quarter revenue to $108 billion with no China data center sales, and it expects gross margin to bottom at 71% to 72% in the January quarter. A soft guide, or lenders pulling back from the AI clouds NVIDIA backs, would make me rethink it.
So what is NVIDIA stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
