The company also halted sales to Russia at that time, which will be a slight headwind for the duration of the current year. That strength carried into Q1 fiscal 2023, offset by the $1.3 billion acquisition termination expense after Nvidia was forced by regulators to abandon its takeover of chip design company ARM. Fiscal year 2022, which corresponds mostly with calendar year 2021, was a record-breaker for Nvidia in terms of net income and free cash flow. This is where things get really interesting for Nvidia. The denominator in the equation is equally (if not more) important to calculating just how attractive a company is. Nvidia may not be a 'cheap' stock, but earnings and free cash flow valuations aren't just about the price of the stock. Ok, now that the present bad news is out of the way, let's talk valuation. But given Nvidia is a top developer of high-end data center chips, restrictions to China could put a serious damper on sales of its newest semiconductor designs. Other semiconductor companies are getting hit by these restrictions as well. Nvidia has yet to provide an update if that viewpoint has changed, which could further impact the company's growth and profitability prospects in the coming quarters. Late in September at the company's semi-annual developer event, Nvidia CEO Jensen Huang had expressed confidence that a license to sell to China could be obtained, or otherwise other chips could be sold instead of its latest and greatest offerings. just formally expanded its restrictions on high-end chips used in data centers (sometimes referred to as supercomputers) and other AI applications, ordering Nvidia and other chip companies to halt shipments until they receive approval to do so. With such a laundry list, what else could possibly go wrong? Federal Reserve aggressively raising interest rates. The semiconductor stock is dealing with a slowdown in consumer spending, an excess of PC inventory, a cryptocurrency market winter (in which Ethereum no longer needs GPUs to manage the blockchain network), the elimination of sales to Russia, and the U.S. The big elephant in the room: A new round of the U.S.-China trade warīefore diving into details, let's spend a moment on what's dragging down Nvidia's share price.

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