A rough few months turned brutal for Nvidia (NASDAQ:NVDA) investors this week when a steep guidance cut triggered a 14% market sell-off. Nvidia stock price is now down 43% in the past six months. Long-term NVDA stock investors are not used to seeing so much red in their accounts.

Now that the dust has settled on the guidance cut, investors are hurting. But while there is a healthy debate to be had about whether Nvidia stock is headed lower or higher from here, long-term investors have no reason to panic.

Is Nvidia’s Business Doomed?

Did Monday’s guidance cut change anything about the long-term growth story for Nvidia? In a word, no.

Nvidia said pressure on China’s economy due to the ongoing trade war weighed on its business in the fourth quarter. It reduced its revenue growth guidance from $2.7 billion to $2.2 billion. Nvidia also said its customers are taking a more cautious approach to their ordering given the current climate. Customers considering data center upgrades have apparently been particularly hesitant.

There’s no question an 18.5% revenue guidance cut is no good, hence the 14% sell-off. However, long-term investors are much more concerned with the quality of  Nvidia’s outlook rather than the quarter-by-quarter fluctuations in the numbers.

First of all, it seems as though China is the primary culprit. Therefore, the trade war is Nvidia’s biggest problem. If you believe the trade war will go on forever, this is bad news for Nvidia. If, however, you believe the trade war will be resolved, likely within the next six months, it will ultimately serve as a bullish catalyst for the stock. There’s a good chance all that caution from Nvidia’s customers will create some pent-up demand as well once the uncertainty is lifted.

Sure, Nvidia’s revenue growth may be slowing this year. But it’s important to keep perspective. Last quarter, Nvidia reported 13% year-over-year gaming revenue growth and 19% growth in its automotive segment. It also reported staggering 58 percent growth in its datacenter business. Trailing 12-month revenue is up 147% over the past three years.

Nvidia isn’t the only company suffering from a weakening China market. But a bump in the road doesn’t change the company’s long-term growth trajectory in rapidly-expanding fields such as online gaming, autonomous vehicles, cloud storage and artificial intelligence.

Is Nvidia Stock Cheap?

Given Nividia’s long-term business outlook is intact, should investors swoop in and buy the stock on the dip? In a word, maybe.

Nothing about the guidance cut changed Nvidia’s long-term growth profile. It also didn’t change the bull-bear Nvidia debate that has been raging for years. Most Nvidia bears aren’t arguing that AV and AI technology are dead-end businesses. Few are claiming Nvidia’s product quality isn’t as good as peers. They simply argue that NVDA stock is way too expensive.

Even after taking a nearly 50% haircut in the past six months, the new guidance suggests the stock may still be too expensive, at least in the near-term.

Needham analyst Rajvindra Gill downgraded NVDA stock on Tuesday. He said the guidance cut eliminates the justification for a premium earnings multiple relative to peers. Nvidia’s forward price-to-earnings ratio has dropped from a peak of 47.2 back in 2017 to just around 24.0 today, based on consensus Wall Street estimates. However, Gill says Nvidia’s peer group’s forward earnings multiples are mostly in the 15 to 18 range. Assuming Nvidia hits the current consensus earnings estimates for 2019, the stock could still have more than 25% of additional downside in earnings multiple compression alone before it is in line with peer valuations.

In other words, Nvidia stock is much cheaper on a valuation basis than it was a year or two ago. However, it still looks pretty expensive in the near-term, especially given the lackluster guidance.

The Bottom Line on NVDA Stock

If you are a long-term investor who is looking for years of portfolio growth from cutting-edge markets such as AI, AV and cloud technology and NVDA stock is a core holding, nothing about this week’s guidance cut is cause for panic.

For long-term investor looking for a buying opportunity in NVDA stock, it’s still not looking particularly cheap. If you’re a short-term trader, keep an eye on Washington D.C. for any definitive trade war news as the next potential bullish or bearish catalyst for the stock.

As of this writing, Wayne Duggan held no positions in the aforementioned securities.