ルコピョン wrote a post · Apr 10, 2024 10:54

Reasons for the decline in Nvidia's stock price

$NVIDIA (NVDA.US)$ It seemed unavoidable that after Nvidia's stock price had more than tripled in the past year, it would be unable to maintain its intense pace. The stock price has finally begun to retrace some of its gains in recent weeks.

Today, Barron's featured an analyst report that threw cold water on the growth forecasts of many investors regarding Nvidia's artificial intelligence (AI) computer chips sales, leading to an expanded decline. The stock price dropped nearly 5% and was down 2.8% at 1:30 p.m. Eastern Time.

The waning dominance of artificial intelligence (AI)

Nvidia has excelled in providing hardware and software to meet the high-power computing needs created by the emergence of many AI applications. $Microsoft (MSFT.US)$ 、 $Meta Platforms (META.US)$ , and furthermore $Tesla (TSLA.US)$ Mega cap technology companies, including , have been leading the long lines of buyers.

However, DA Davidson analyst Gil Luria believes that this is exactly the reason for the decline in Nvidia's stock price. Luria explained in a recent report that these major technology companies will soon divert spending towards expanding production of their own AI-related hardware. Luria believes this will lead to a significant economic downturn for Nvidia by 2026.

Based on this thinking, DA Davidson predicts that Nvidia's stock price will fall to $620 per share. This would be nearly a 30% drop from Monday's closing price. However, investors should view this forecast in a larger context. Nvidia is not just an AI chip company. In the coming years, there is potential to increase revenue from other areas, including autonomous driving technology.

Nvidia's stock price has indeed risen far and fast. However, even with the expected target price, Luria is maintaining a 'hold' rating. For long-term investors, this is likely a wise decision. If the stock price continues to decline, it could even be an opportunity to buy more.