Nvidia stock has been a fine performer over the past couple of years, rising more than 230% thanks to the robust growth in the company's earnings and revenue. Additionally, the potential rate hikes will make investments in Treasury bonds more attractive, as they will be yielding higher interest rates, causing richly valued tech stocks such as Nvidia to slide further.Īs a result, Nvidia investors may be tempted to hit the sell button right now and avoid any more losses. The Nasdaq 100 Technology sector index is already down over 14% in 2022, and market watchers believe that it could slide further by the end of the year. Not surprisingly, the tech-heavy Nasdaq 100 index is expected to lose more ground this year and fall into a bear market. The investment bank was previously anticipating five interest rate hikes this year, but surging inflation may force the Fed's hand and lead to a more aggressive policy. Goldman Sachs estimates that we could see seven quarter-point rate hikes this year. Such a rich valuation makes Nvidia stock susceptible to further declines given the number of interest rate hikes that the Federal Reserve could resort to in 2022.
Trading at 74 times trailing earnings, 46 times forward earnings, and 25 times sales, Nvidia stock isn't cheap compared to the Nasdaq 100 index, which sports a price-to-earnings ratio of 34. One of the biggest reasons investors may consider selling Nvidia stock is the company's valuation.
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