Should You Worry About NVIDIA (NVDA) Stock Weakness? Top Analyst Says No

Needham's Rajvindra Gill sees not much of a financial impact to NVDA shares on the heels of a troublesome round of negative headlines.


NVIDIA Corporation (NASDAQ:NVDA) investors have been tackling bad publicity over the course of a week and a half that sent shares tumbling 10%. First, there was an Uber fatality that has the Street in an uproar questioning the future scope of autonomous driving. Second boils down to the danger of new rivalry: China ASIC giant Bitmain has an ASIC that when unleashed could cramp GPU demand for cryptocurrency.

Top analyst Rajvindra Gill at Needham is neither shaken nor stirred by the news, reiterating a Buy rating on NVDA stock with a $300 price target, which implies a close to 34% upside from current levels.

Advanced driver-assistance system (ADAS) technology to cryptocurrency, the analyst understands certain “distinctions have to be made” here.

“We argue that both events will have an immaterial financial impact to NVDA’s bottom-line, but more importantly miss the larger opportunity. We believe it’s prudent to make a distinction between ADAS (or high levels of autonomy for safety) vs. a full blown ‘Level 5’ self-driving vehicle, which requires no driver monitoring. While NVDA has been vocal about targeting L5 robotaxis, we argue NVDA’s Drive autonomous computing platform, which includes the real-time sensor fusion, HD mapping and path planning, will be deployed across various L2A-L4 systems. For these systems, driver monitoring is required but specific driving functions become automated: lane merge, lane departure, autonomous highway exit, and autonomous highway driving. These applications are rapidly being deployed by auto OEMs, driven both by government mandated requirements and customer demand for safer vehicles,” explains Gill.

Regarding crypto fears, the analyst calculates that the company brings $79 to $151 million to the table in each quarter on back of crypto gains. Even in a case of a sharp dip from 20% to 30%, Gill wagers a mere $0.02 to $0.05 shaved off Nvidia’s EPS power. Fundamental demand for GPU gaming continues strong as ever, continues the analyst who concludes that crypto “is not even close to being the main driver of GPU demand.”

Rajvindra Gill has a very good TipRanks score with a 63% success rate and a high ranking of #39 out of 4,756 analysts. In his annual returns, the analyst reaps 20.4%. Gill realizes 28.4% in average profits when he bets on this chip giant.

TipRanks showcases Nvidia as a stock worth the Buy on the Street, when taking under account consensus sentiment that leans towards the bulls. Out of 26 analysts polled in the last 3 months, 16 are bullish on NVDA stock, 8 remain sidelined, while just 2 are bearish on the stock. With a solid return potential of 19%, the stock’s consensus target price stands at $256.82.