Nvidia Downgrade: Blackwell Ramp Expectations Spark Caution Among Analysts
Friday, Nov 22, 2024 12:44 pm ET
3min read PhillipCapital, a financial services firm, recently downgraded Nvidia Corporation's stock from 'Buy' to 'Accumulate' amid expectations surrounding the ramp-up of the company's Blackwell chip series. This move by the analyst, Yik Ban Chong, reflects a cautious stance on Nvidia's near-term profitability, despite the company's strong third-quarter performance and bullish long-term prospects.
Nvidia's Blackwell chips, anticipated to debut in the fourth quarter of 2025, are expected to have initial gross margins in the "moderate to low-70s," below the company's typical levels. While margins are projected to improve as production scales, the short-term profitability pressures have tempered investor sentiment, leading to PhillipCapital's downgrade. However, the firm raised its price target for Nvidia from $155 to $160, indicating confidence in the company's long-term growth potential.
Other Wall Street analysts remain bullish on Nvidia's stock despite the downgrade. Rosenblatt Securities' Hans Mosesmann maintained a 'Buy' rating and raised the price target from $200 to $220. Similarly, Cody Acree of Benchmark Capital reiterated a 'Buy' rating and increased his price forecast from $170 to $190. These analysts focus on Nvidia's strong long-term growth prospects, innovative pipeline, and robust third-quarter performance, outweighing near-term margin concerns.
The concerns about Blackwell chip overheating and initial delays have also influenced the analyst's decision. Although Nvidia assured investors that Blackwell is in "full production" and progressing at "full steam," lingering doubts about these issues may have contributed to the downgrade. Despite the short-term setback, Nvidia's shares remain largely supported by bullish outlooks from other analysts, suggesting that investors should view the downgrade as a temporary obstacle.
In conclusion, the downgrade of Nvidia's stock by PhillipCapital reflects a cautious stance on the company's near-term profitability, driven by concerns about Blackwell chip margins, overheating, and initial delays. However, the bullish long-term prospects and supportive views from other analysts underscore the resilience of Nvidia's stock and the company's commitment to driving innovation in the AI sector. As Nvidia continues to navigate the challenges and opportunities presented by the AI revolution, investors should remain vigilant and adaptable to capitalize on the company's growth potential.
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Nvidia's Blackwell chips, anticipated to debut in the fourth quarter of 2025, are expected to have initial gross margins in the "moderate to low-70s," below the company's typical levels. While margins are projected to improve as production scales, the short-term profitability pressures have tempered investor sentiment, leading to PhillipCapital's downgrade. However, the firm raised its price target for Nvidia from $155 to $160, indicating confidence in the company's long-term growth potential.
Other Wall Street analysts remain bullish on Nvidia's stock despite the downgrade. Rosenblatt Securities' Hans Mosesmann maintained a 'Buy' rating and raised the price target from $200 to $220. Similarly, Cody Acree of Benchmark Capital reiterated a 'Buy' rating and increased his price forecast from $170 to $190. These analysts focus on Nvidia's strong long-term growth prospects, innovative pipeline, and robust third-quarter performance, outweighing near-term margin concerns.
The concerns about Blackwell chip overheating and initial delays have also influenced the analyst's decision. Although Nvidia assured investors that Blackwell is in "full production" and progressing at "full steam," lingering doubts about these issues may have contributed to the downgrade. Despite the short-term setback, Nvidia's shares remain largely supported by bullish outlooks from other analysts, suggesting that investors should view the downgrade as a temporary obstacle.
In conclusion, the downgrade of Nvidia's stock by PhillipCapital reflects a cautious stance on the company's near-term profitability, driven by concerns about Blackwell chip margins, overheating, and initial delays. However, the bullish long-term prospects and supportive views from other analysts underscore the resilience of Nvidia's stock and the company's commitment to driving innovation in the AI sector. As Nvidia continues to navigate the challenges and opportunities presented by the AI revolution, investors should remain vigilant and adaptable to capitalize on the company's growth potential.
Word count: 598
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