What happened

Shares of Nvidia (NVDA 0.35%) were under pressure on Tuesday morning, falling as much as 3.1%. As of 12:16 p.m. ET, the stock was still down 2.1%.

While the chipmaker was no doubt caught up in the market downdraft, bearish comments by a Wall Street analyst weighed further on its share price.

So what

Citigroup analyst Chris Danely -- who covers the semiconductor industry -- believes chipmakers have further to fall before eventually bottoming out. He noted that analysts' consensus estimates for the space had fallen for "the first time since the pandemic," driven lower by slowdowns in both the handset and PC markets.  

Furthermore, the analyst sees the beginnings of a correction in the automotive and industrial sectors. "We continue to believe we are entering the worst semiconductor downturn in a decade given the recession and inventory build," Danely wrote in a note to clients.

As a result, he believes that "every company/end market will correct and we expect the SOX [semiconductor] index to hit new lows and fall another 25%."

Now what

The semiconductor industry has always been cyclical, characterized by boom and bust cycles. In fact, it's the prospect of the upcoming trough of that cycle that has driven Nvidia stock down more than 53% off last year's high.

However, investors with a long-term outlook need only look to Nvidia's results from last year to see what the future holds. In fiscal 2022 (ended Jan. 30), Nvidia generated record revenue of $26.9 billion, up 61% year over year, driven by strong performances from both its gaming and data center segments. 

Nvidia's graphics processing units (GPUs) are the chip of choice for diehard gamers. At the same time, its processors are a staple in every major cloud computing operation. Given its industry dominance, it's only a matter of time before the tide turns. 

The stock is currently selling for less than 12 times next year's sales, well below its five-year average price-to-sales ratio of 17. Although the stock could fall further, Nvidia's a bargain at these prices.