Over the last two years, Nvidia (NASDAQ: NVDA) has been on a notable bull run. The leading GPU manufacturer carved out a very profitable niche as the leading provider of computing solutions for the artificial intelligence revolution.
However, continued outperformance eventually leads to outsized expectations. While the chipmaker delivered a series of standout quarters, it has become increasingly difficult to impress investors. After the last earnings call on November 20, aggressive profit-taking ensued.
In the aftermath, the upward momentum almost ground to a halt — and even though Nvidia stock reached a new all-time high (ATH) of $153.06 in early January, it immediately pulled back — within a day, prices dropped to as low as $141.60, marking the stock’s worst trading day in 5 months.
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At press time, a single NVDA share was trading at $133.54, having marked a 1.16% increase in price over the last 30 days.
While Wall Street remains bullish on the whole, the expectations are now tempered by caution and the average price target set by equity researchers projects a modest upside when compared to the recent performance of Nvidia stock.
Recently, one major Wall Street firm made an unexpected move — lowering its price target for Nvidia stock. Let’s take a closer look at their rationale.
HSBC slashes Nvidia stock price target
Frank Lee, the head of HSBC’s (NYSE: HSBC) technology hardware & semiconductor research, revised his price target for NVDA stock on Sunday, January 12. The analyst reissued a prior ‘Buy’ rating, while also lowering his price target from $190 to $185 — a mark that still represents a significant 38.53% upside from the current price of an NVDA share.
Lee explained that HSBC is now factoring in a potentially weaker momentum in the first half of Nvidia’s FY26 in a note shared with investors. Such an occurrence would lead to increasing pressure for a stronger ramp in the second half of the year. In accordance with this, the prediction for data center revenue has been revised from $253 billion to $236 billion.
With all of this in mind, HSBC has lowered its earnings per share (EPS) estimate by 6% — down to $5.74. Since the firm uses a 32x price-to-earnings (PE) multiple in its projections, the price target corresponds to this new projection.
In contrast, most recently Bank of America (NYSE: BAC) analyst Vivek Arya reiterated his bullish stance recently — restating a previous $190 price target. However, readers should note that the BofA researcher also highlighted that Nvidia stock would likely see headwinds until the release of the semiconductor company’s next earnings call on February 26.
Featured image via Shutterstock
