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Reading NVIDIA’s Bearish Analysts

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Long-term bulls on NVIDIA

Many Wall Street analysts are bullish on NVIDIA (NVDA) for both the short and long terms. Raymond James analyst Chris Caso increased his price target on NVIDIA from $250 to $275 after the company’s earnings once again beat estimates by a huge margin.

James believes that the long-term growth catalysts of autonomous driving and inferencing will continue to move stock price upwards.

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Bank of America Merrill Lynch

Bank of America Merrill Lynch analyst Vivek Arya also increased his price target on NVIDIA from $251 to $275 as he is bullish on the company’s gaming opportunity. He believes that the company’s gaming cards have a strong upgrade potential as its Pascal GPUs (graphics processing units) are used by only 40% of its customers on Steam, a PC (personal computer) gaming distribution platform. If NVIDIA launches Volta-based gaming GPUs in 2H18, it could bring another upgrade opportunity.

Moreover, the Nintendo Switch console, which is powered by NVIDIA’s Tegra processors, has become the best-selling console in the US in the first 10 months of its launch. Apart from gaming, NVDIA’s exposure to the fast-growing markets of AI (artificial intelligence), VR (virtual reality), and autonomous driving makes Vivek Arya bullish on the stock.

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Bearish analysts

At a time when most analysts are bullish on NVIDIA, a few analysts are bearish. However, the Wall Street analysts’ bearish price target for NVIDIA has also increased 15% from $87 in January 2018 to $100 in February 2018.

Advanced Micro Devices’ (AMD) and Intel’s (INTC) bearish price targets have increased 40% and 19% to $7 and $38, respectively. The stocks are now trading above $12 and $45.

Citron Research

Citron Research analyst Andrew Left is bearish on NVIDIA and believes that the stock price will pull back to $200 from the current trading price of $241. He believes that the following four factors would deter NVIDIA’s growth in the next 12 months:

  • Bitcoin prices could fall, impacting NVIDIA’s earnings.
  • A new wave of AI startups could give tough competition to NVIDIA in 2018.
  • Competition is growing in the data center space, with rivals like AMD and Intel bringing AI capabilities in their server chips.
  • Recent reports have shown that Google’s (GOOG) Waymo is overtaking NVIDIA in the autonomous driving space by bringing autonomous cars into commercial use before NVIDIA.

While other analysts find NVIDIA’s expansion in multiple fast-growing markets a growth catalyst, Andrew Left finds it “dangerous.” Left writes: “Playing multiple expansion is like playing chicken, it doesn’t end well for shareholders.”

However, NVIDIA has been proving the bearish comments on it to be wrong for the past two years—and may do so again this year.

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