nvidia's bumpy ride: cramer predicts short-term dip

2025-05-02 nvidia

new york, Friday, 2 May 2025.
Despite a long-term bullish view on Nvidia, Jim Cramer foresees potential challenges for the stock. His analysis suggests that nvda could experience increased market volatility. Nvidia’s revenue reached $40 billion in 2024, a considerable surge from $26 billion in 2020, with AI-related segments contributing 60% of the total. However, U.S. export restrictions on advanced H20 chips to China could impact earnings. Cramer now refers to NVIDIA as a meme stock, highlighting its recent volatility amid trade war concerns.

export restrictions and financial impact

U.S. export controls, which were finalized in April 2025, prohibit the shipment of advanced H20 chips to China without proper licenses [3]. This restriction is projected to cause a $5.5 billion hit to Nvidia’s earnings in the first quarter of 2025 [3]. The announcement of these controls led to a 6.9% single-day stock drop on April 16 [3]. The Chinese market previously accounted for 17% of Nvidia’s revenue, highlighting the significance of this region to the company’s overall financial performance [3].

competition and market dynamics

Nvidia faces increasing competition from companies like Huawei, DeepSeek, Amazon, and Apple [3]. DeepSeek’s large language model (LLM) uses 20% less power than Nvidia’s H100 [3]. Nvidia’s stock volatility has decreased by 15% in 2025 due to regulatory concerns [3]. Despite these challenges, analysts at Bank of America estimate that Nvidia’s AI chip sales could reach $60 billion annually by 2027 [3]. CEO Jensen Huang sees a $40–$50 billion opportunity per gigawatt of data center capacity [3].

cramer’s perspective and market sentiment

Jim Cramer has expressed concerns about Nvidia’s short-term prospects, even though he maintains a positive long-term outlook [1]. He trimmed his Nvidia position in anticipation of market fluctuations [2]. Cramer described Nvidia as being caught in the crossfire of trade wars [3]. He also noted that the demand for Nvidia’s products remains incredibly strong [3]. Cramer believes the key question is about who controls the technology, not just the technology itself [3].

valuation and future outlook

Nvidia’s valuation currently stands at 25 times its forward earnings, a decrease from 35 times in 2023 [3]. Despite potential losses from export restrictions, most Wall Street analysts share Cramer’s long-term optimism about the company [6]. On April 30, 2025, CNBC’s ‘Squawk on the Street’ discussed various economic data points and their impact on the market [4]. Discussions included GDP data, Trump’s first 100 days, and earnings movers, reflecting broader market concerns that could influence Nvidia’s performance [4].

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