“Today we downgrade the stock's rating to Neutral, as the rise will only materialize in a “It's a bullish case where the outlook beyond 2025 is substantially increased, and we do not yet have conviction that this scenario will play out,” New Street analyst Pierre Ferragu said in a report published on Friday.
The firm values Nvidia at 35x and set a 12-month price target of $135 for the ai GPU leader.
“The quality of the franchise is intact and we would buy again, but only in the event of prolonged weakness,” Ferragu added.
Wall Street maintains a bullish view on Nvidia. Of the 54 ratings Wall Street analysts have made in the last 90 days on Seeking Alpha, 41 analysts rate it as Strong Buy, nine as Buy and only four as Hold.
However, both Seeking Alpha analysts and the Seeking Alpha Quant system, which regularly outperforms the market, rate it a “Hold.”
New Street maintains its Buy ratings on several other stocks exposed to ai infrastructure trends, including Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing Company (TSM), Broadcom (AVGO) and Micron technology (MU).
“For the first time since we announced an inflection in ai infrastructure spending in January 2023, we see expectations for ai semiconductors aligned with supply chain capacity planning, aligned with demand expansion beyond hyperscalers, implying very strong capex revisions toward capex-to-sales ratios of 15-19%, and aligned with gigacluster deployment plans,” Ferragu said.
“While Nvidia remains the strongest ai data center franchise, near-term expectations and valuation warrant a more cautious view on the stock,” he added.
