How do you value a chip stock like Nvidia?
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Semiconductor stocks are under pressure premarket Wednesday on a report that tensions between U.S. and China in the sector could heat up.
The White House is reportedly weighing implementing restrictions on AI chip exports to China. Nvidia (NASDAQ:NVDA), AMD (AMD), Intel (INTC) and Taiwan Semi (TSM) are all in the red ahead of the open.
Analysts say NVDA in particular could see a notable impact on revenue as a result.
Deutsche Bank took a closer look at the chart of Nvidia with an eye to valuation. 
"As we know, AI and tech have driven the S&P 500 (SP500) (SPY) (IVV) (VOO) rebound in 2023," Deutsche Bank's Jim Reid wrote. "Todayâs (Chart of the Day) shows that Nvidiaâs price-to-sales ratio has gone from under 10x in October last year to just over 40x over the last week."
"The S&P trades at 2.4x and the Nasdaq 3.6x, both on the high side of history," Reid said. 
"Iâll be totally honest that Iâve absolutely no idea how to value Nvidia."
"Given itâs already the worldâs 6th largest company it does matter to macro so I feel uncomfortable not having a framework," he added. "While I think AI will be transformative, the valuation looks stretched."

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