Why Nvidia is Making Analysts “Nervous” and Why You Should Be Too


Nvidia (NASDAQ: NVDA) has had an interesting past few months. A stock that is still up around 19 percent in the year, shares of the chip-producer have risen and fallen significantly but still remain down 45 percent from last year’s high.

One Wall Street analyst has gone on to say that he feels “nervous” about the prospect of buying the stock, arguing that investors should wait until prices fall lower before making a decision.

Bernstein analyst Stacy Rasgon doubled down on his “market perform” rating for Nvidia’s stock, arguing that there are big risks to the company’s earnings.

Just last month, Nvidia withdrew its full-year guidance it had given despite slightly outperforming market expectations. The company went on to cite low visibility in the data center market as a potential hindrance to the companies future profits.

“We are not as inclined to buy the dip, and…are growing nervous on the shares,” wrote Rasgon, according to Barrons. “While [Nvidia’s] valuation has come in somewhat, the shares still are not cheap.” “We recommend that investors evaluating the name tread somewhat lightly at the moment, with the potential for better entry points to come.”

Some have gone on to argue that Nvidia could see a potential upside in the coming months, as previously high first-quarter inventories could have been sold off by now as supplies and prices for their high-end GeForce graphics cards stabilize.

Additionally, the graphics card maker has rumored they’d be releasing a new, high-end card at lower prices at a time specifically meant to disrupt the latest product launch of their primary rival.

Nvidia’s main competitor, Advanced Micro Devices (NASDAQ: AMD), has been facing similar challenges. However, AMD has performed much better over the past 12-months, with the stock surging by 92 percent while Nvidia’s have fallen over the same time period. This is also in spite of the fact that Nvidia has a significant market share lead over AMD during that time frame.

Shares of Nvidia jumped up by 5 percent today seemingly in spite of what the analyst had to say. Over the past few months, the company’s stock price has risen, fallen, and are now rising again in something that resembles a head and shoulders type pattern.

So far in the year, Nvidia rose from around $130, peaking at just under $190, before falling back to below $140 and are now trading at $161.

Time will tell whether or not Nvidia will make a recovery. However, the general consensus on Wall Street is the Nvidia is a good buy opportunity at the moment, with most analysts having a “buy” rating while fewer still have a “hold.” One analyst does have a “sell” rating for the stock, likely sharing many of the same concerns that Rasgon has.

Nvidia Company Profile

Nvidia is a leading designer of graphics chips that enhance the experience on computing platforms. The firm’s chips are used in a variety of end markets, including high-end PCs for gaming, data centers, and automotive infotainment systems.

In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm’s graphics processing units. – Warrior Trading News