Nvidia Corp.’s breakneck rally since the start of last year has finally run out of room to push higher, according to New Street Research analyst Pierre Ferragu.
Ferragu downgraded the AI-focused chipmaker to neutral from buy, writing that the stock is “getting fully valued” after soaring 157% this year, on top of a gain of almost 240% in 2023. Shares fell 0.6% on Friday, compared with a gain of 1% for the Nasdaq 100 Index.
Additional upside “will only materialize in a bull case, in which the outlook beyond 2025 increases materially, and we do not have the conviction on this scenario playing out yet,” Ferragu wrote.
While the “quality of the franchise is nevertheless intact,” there is, “if anything, a risk of derating” should the current outlook remain unchanged, he added.
Nvidia is the second-best performer among S&P 500 components this year, behind Super Micro Computer Inc, another favorite among AI investors. The climb has added $1.9 trillion to Nvidia’s market capitalization, and briefly resulted in it attaining the title of the world’s largest company.
Analyst downgrades are rare for a company that has become the biggest beneficiary of the artificial intelligence spending boom. Nearly 90% of the analysts tracked by Bloomberg recommend buying the stock. However, valuation is often cited as a concern. Nvidia trades at nearly 23 times estimated revenue for the next 12 months, making it the most expensive stock in the S&P 500 Index by this measure.
New Street set a one-year price target of $135 for Nvidia, compared with its most recent close of $128.28.
Beyond Nvidia, New Street is positive on both Advanced Micro Devices Inc. and Taiwan Semiconductor Manufacturing Co Ltd., citing their growth trends and valuations.
AMD and TSMC are “the best names to own in the group, offering strong upside in both in our base and high scenarios,” New Street said in a note, adding that among other stocks with AI exposure, Broadcom Inc., Arista Networks Inc. and Micron Technology Inc. all “remain attractively valued.”
Financial services compliance consultant ACA Group told InvestmentNews it had four clients report receiving emails that impersonated David Bottom, the SEC's chief information officer, with smaller firms being targeted.
Financial advisor Derek Wittjohann shares the lessons he learned after leaving a major wirehouse to set up his own practice in the second installment of InvestmentNews' new 'Independence Stories' series.
Whether a firm manages $50 million or $5 billion in client assets, building a succession strategy needs to be a priority at least a decade out from retirement.
RIA assets are key for broker-dealers right now.
The former investment advisor misled clients in a decade-long scheme to fund international travel expenses, country club fees, and other personal expenses, according to three government agencies.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
