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The chipmaker is trading at nearly 84 times trailing earnings, which is way above its five-year average earnings multiple of 56 and the S&P 500's earnings multiple of 28.

The biggest challenge that Nvidia faces going into the new year is justifying its rich valuation, for which it will have to sustain its impressive pace of growth. NVDA data by YCharts What could go wrong for Nvidia in 2022? Another reason may be the global chip shortage that is likely to continue well into 2022 and potentially hurt Nvidia's sales, as it may not get enough components to manufacture its graphics cards that are used in several applications ranging from personal computers (PCs) to data centers to cars.Ĭonsidering these headwinds, will Nvidia be able to replicate its hot stock market performance in 2022? Or will the chipmaker fall prey to external factors that could throw its outstanding growth out of gear? Federal Trade Commission's (FTC) move to block Nvidia's proposed acquisition of British semiconductor company Arm Holdings.

One of the reasons for the stock's recent dip is probably the U.S. Though Nvidia stock is still up 108% year to date, investors seem to be having second thoughts about the company's prospects. The wheels have come off Nvidia's ( NVDA 0.70%) terrific stock market rally in the final month of 2021 shares of the graphics cards specialist are down about 13% so far in December after dipping almost 10% halfway through the month.