Nasdaq NVDA Nvidia

What happened Shares of Nvidia (NASDAQ: NVDA) soared in early trading this morning after an analyst raised his price target for the technology stock.

Based on industry checks with those in the know, Baird's 5-star analyst Tristan Gerra notes that consumer GPU inventories are on the rise. This spells bad news for GPU leader Nvidia (NVDA).

Demand weakness in Asia appears to be one of the culprits and to an extent so is the embargo on Russia shipments. Additionally, in anticipation of Ethereum’s migration from Proof of Work to Proof of Stake, miners appear to be selling hardware.

March saw a month-over-month price drop of 25% for consumer GPUs, with prices now 25% above historical levels. This brings the pricing back to levels last seen at the beginning of 2021. This is below the 80%+ premium over the MSRP (manufacturer’s suggested retail price) of a quarter ago and some way off May 2021’s more than double the MSRP for GPUs. The prices for Nvidia's RTX 3080 series are also declining.  

“While Nvidia sells at MSRP and would not be impacted by the price declines, current ASP trends reflect softening demand as card availability improves. Based on our checks, we note no shortages of graphic cards in the Asia markets," says Gerra.

With regards to the sale of GPUs intended for Ethereum mining, Gerra says it is hard to tell what the percentage of cryptocurrency mining is compared to total consumer GPU demand. At the 2018 cycle peak, it was thought to be as high as 40% of the mix. Gerra anticipates miner selling dynamics will “worsen” in C2H22.

Additionally, over the past three months, graphic card resellers’ revenue has been “tracking below” normal seasonality, down more than 20%, which compares unfavorably to the low single-digit decline usually seen during the same period.

Providing some succor, data center demand “remains strong and will continue to be an offset near term.”

For now, Gerra stays with the bulls, reiterating an Outperform (i.e., Buy) and $360 price target on NVDA shares. This figure conveys his confidence in NVDA's ability to rise ~24% in the next twelve months. (To watch Gerra's track record, click here)

Most analysts are reading from the same manual; based on 21 Buys vs. 5 Holds, the stock claims a Strong Buy consensus rating. Going by the $350.22 average target, investors will be sitting on returns of 24% a year from now. (See Nvidia stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

In this video, I will be talking about Nvidia (NASDAQ: NVDA) and the recent announcements it made during the GTC event with regard to Omniverse. You can find the video below, but here are some of the highlights.

Today's video focuses on recent news affecting technology stocks. Here are some highlights.

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The ongoing digital transformation and strong product demand led to a significant rise in Nvidia (NASDAQ: NVDA) stock, which more than doubled in one year. Further, its ability to innovate and stay ahead of competition bodes well for growth. 

Citing the rollout of its next-gen Hopper computing architecture and Hooper-based H100 chipset, J.P. Morgan analyst Harlan Sur stated that Nvidia remains “1-2 steps ahead of its competitors.” Sur noted that the next-gen H100 chipset shows “significant performance gains” over its predecessor A100 chip.

The analyst added, “NVIDIA is well-positioned for AI and high-performance computing applications due to its new hardware technology, and supported by strong ecosystem development and new software infrastructure.”

Sur expects Nvidia to benefit from the ongoing strength in the data center and PC gaming segments. Further, the growing use cases of its chips are positive. For instance, the analyst is upbeat about growth opportunities in the automotive and enterprise segments. Sur has a Buy recommendation on NVDA stock and sees strong upside potential. 

While Sur is upbeat about Nvidia’s next-gen data center platform, Rajvindra Gill of Needham is “excited about the bourgeoning software opportunity for NVIDIA.” Gill added that Nvidia “sports one of the strongest financial profiles” in the semiconductor space and recommends a Buy on NVDA stock. 

Wall Street's Take

Along with Sur and Gill, most Wall Street analysts are bullish on Nvidia stock. It has received 21 Buys and five Hold recommendations for a Strong Buy consensus rating. Notably, the average Nvidia price target of $350.22 implies 26.4% upside potential from current levels.

Bottom Line

Nvidia could continue to deliver strong financials on the back of the strength in the data center and gaming division. Further, product launches and software opportunities, including early traction in its Omniverse enterprise software, bode well for growth. 

Further, TipRanks’ data shows that retail investors and hedge funds are accumulating NVDA stock. Per TipRanks’ Stock Investors Tool, 2.5% of retail investors holding portfolios on TipRanks have accumulated NVDA stock over the past month. 

Meanwhile, TipRanks’ Hedge Fund Trading Activity tool shows that hedge funds added 1.3 million NVDA shares in the last three months.

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To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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