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Why You Shouldn’t Get Too Excited About Nvidia (NVDA) Stock Right Now


Nvidia (NVDA) recently announced its Turing GPU, which could spark a revolution in video gaming due to its enhanced capacities. The new design enables real-time ray tracing, a capability Nvidia claims is the “greatest leap since the invention of the CUDA GPU in 2006.” However, not everyone is upbeat.

Nomura analyst Romit Shah points out that his surveys of Nvidia’s core user base and the tech press indicate mixed feedback, and as such, his estimates for gaming and revenue overall remain modestly below consensus.

Shah commented, “The market reaction speaks for itself, but we’ve observed a mixed response to Turing from the user base and tech press. We’ve spent the past week surveying Nvidia’s core user base. We’ve seen a fair split of excitement and criticism for Turing. The criticism largely relates to the aggressive gen/gen pricing (particularly of the ‘Founders Edition’) and the limited raw performance details provided thus far by Nvidia. This lack of detail is compounded by a longer than typical embargo of independent reviews and benchmarking, which we expect will begin to publish during the week of 9/17, around the end of the pre-order period.”

The analyst also sees some uncertainty surrounding the phase-out of cryptorelated revenue and its impact on the gaming segment: “While Nvidia appears to be appropriately focused on moving past crypto, it remains unclear to both us and management exactly how much crypto-related revenue fell into GeForce gaming in recent quarters (versus OEM & IP). This directly increases the challenge of forecasting core gaming demand. Indirectly, it could lead to an elevated volume of high-performance legacy GPU’s hitting the resale market in the coming months, potentially drawing demand away from the more expensive 2080 products, in our view.”

Net net, Shah reiterates a Neutral rating on Nvidia shares, with a price target of $250, which represents a potential downside of 6% from where the stock is currently trading. (To watch Shah’s track record, click here)

While Shah sits on the sidelines waiting for the stock to reset itself, most analysts on Wall Street anchor a bullish perspective on the chip giant, as TipRanks analytics showcase NVDA as a Buy. Based on 24 analysts polled in the last 3 months, 17 are bullish on Nvidia stock, while 7 remain sidelined. The 12-month average price target stands at $292.21, marking a nearly 9% upside from where the stock is currently trading. (See NVDA’s price targets and analyst ratings on TipRanks)