Weakening Growth?: Analysts Cut NVIDIA Stock Price Target: Is NVIDIA Facing Falling Demand? | news

Exclusive sources denounce a supposed drop in demand
Some analysts lower price targets for chipmakers
Valued at too much growth? NVDIA shares weaken

NVIDIA’s stock couldn’t be held back in recent years on the stock market: The Santa Clara, California-based graphics card company was able to outperform even the wildest analyst expectations nearly every quarter, the stock price kept going up. NVIDIA is extremely well positioned in many megatrends, such as autonomous driving or gaming, and the market has so far priced in huge growth for several years. Analyst CJ Muse recently caused a stir when he ranked NVIDIA as “arguably the biggest technology company” in the world. But now two analyst reports are causing major concern among NVIDIA shareholders. More and more analysts and investors are asking: Is the company’s rapid growth really set in stone?

Investment Firm Truist Reports Drop in Demand for Semiconductor Products

Last week, a report by US investment firm Truist triggered a broad price decline in the semiconductor industry. As reported by Seeking Alpha, Truist says it has “credible evidence of contract cuts.” Truist analyst William Stein spoke of a “sudden and negative turn” in the demand situation, which will be reflected in the order situation of semiconductor manufacturers in the coming months. He received exclusive information about order cuts from two experts in the semiconductor industry. The exact reason has not been given. The worst for the semiconductor industry would be a general drop in demand due to market glut, while a short-term slowdown due to temporarily full inventory would be more manageable.

In any case, Stein is bearish on NVIDIA and Co. for the near future: Although the analyst expects continued strong figures for the first quarter and perhaps also for the second quarter of this year, growth will cool significantly in the second half of 2023. . Investors reacted uncertainly to this news and increasingly clicked the sell button: NVIDIA, AMD and Intel shares fell several percent to the south.

Baird also lowers price targets for semiconductor stocks

Stein linked this new information to a purchase warning for his customers. The analyst also lowered its price targets for the world’s three largest chipmakers: NVIDIA from $347 to $298, AMD from $144 to $111, and Intel from $53 to $49. Truist isn’t the only analyst firm lowering its price targets for semiconductor stocks. Tristan Gerra of investment bank Robert W. Baird also significantly lowered his NVIDIA price target from $360 to just $225. According to Seeking Alpha, Gerra justified his reassessment with declining consumer interest in graphics processors as a result of “excess inventories”. Interestingly, Gerra sees the upcoming “hard fork” (split in the blockchain due to conflicting plans of crypto programmers) of the cryptocurrency ether as a possible reason for further “intensification of weak demand” for graphics processors, which NVIDIA, as the world’s largest graphics card manufacturer, would be hit particularly hard. Furthermore, demand for computers is falling and Western sanctions against Russia are not leaving NVIDIA untouched. Like Stein, Gerra also assumes that after a strong first quarter of 2022, NVIDIA will initially no longer match the growth rates of recent years.

NVIDIA stock is currently weakening after a rapid rise in recent years.

NVIDIA stock is a favorite of many investors. When you look at stock performance, it’s no wonder: While NVIDIA stock was less than $75 before the corona pandemic, it reached its previous record high of $346.47 on November 22, 2021. Thanks to this stock market development, the graphics card maker is now one of the largest companies in the world with a market capitalization of more than 500 billion US dollars. However, in recent months, NVIDIA has been unable to continue the successful performance of last year. NVIDIA shares are currently trading at $222.03 on the NASDAQ (closing date: April 13, 2022), an all-time high is more than 30 percent away. After all, NVIDIA is still up more than 45 percent over a 12-month period. If you follow Baird’s analysis, the recent weakness in NVIDIA stock may have company-specific reasons, in addition to the general weakness in tech stocks due to US 50 rate hikes despite the setback rated as very ambitious.

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