nvidia's ai reign: is the party over?

2025-04-03 nvidia

new york, Thursday, 3 April 2025.
hsbc has downgraded nvidia, a major player in the ai sector. the investment bank cites limited upside, even after a recent stock dip. increased competition and market saturation are causes for concern. hsbc analysts suggest nvidia’s current valuation already bakes in much of its future growth. the ai darling’s stock has already fallen 26% since january. is this a warning sign for the broader ai market, or just a bump in the road for nvidia?

revised price targets

HSBC’s downgrade included a significant reduction in the price target for nvidia, bringing it down to $120 from $175 [5]. This decrease reflects diminished earnings expectations and a lower target price-to-earnings ratio [5]. Despite this downgrade, other firms maintain a more optimistic outlook. President Capital, for instance, adjusted its target price to $165, while still maintaining a buy rating on the stock [6]. The average target price from analysts surveyed by FactSet is $175.11, indicating a wide range of opinions on nvidia’s future performance [6].

market reaction and financial metrics

The downgrade had an immediate impact, with nvidia’s stock price declining 5.8% in early trading [5]. Recent trading data shows the stock at $101.80, a 7.807 or 7.81% decrease [7]. The total market capitalization stands at approximately $2.48 trillion, with a price-to-earnings ratio of 34.63 [7]. Trading volume is high, with 335 million shares changing hands [7]. These metrics reflect significant investor activity and sensitivity to news surrounding nvidia [7].

future growth prospects

HSBC anticipates a 62% revenue increase and a 58% earnings per share (eps) increase for nvidia in fiscal year 2026 [5]. However, they believe limited potential for further earnings surprises may restrict stock appreciation [5]. They point to weakening pricing power for nvidia’s gpus as a factor limiting upside [5]. The average selling prices for the newest gpus, such as the B300 and GB300 NVL72 rack architecture, have not significantly increased [5]. The Vera Rubin platform is also expected to offer only minor improvements until the Rubin Ultra upgrade in 2027 [5].

challenges and opportunities

Several factors contribute to the uncertainty surrounding nvidia’s valuation. These include potential pushback on capital expenditure from cloud service providers and long-term demand from deepseek [5]. Supply chain issues could further limit the company’s growth [5]. HSBC identifies robotics and autonomous driving ai as potential future growth drivers for nvidia [5]. However, significant revenue contributions from these sectors are not expected in the near term [5]. These emerging markets represent both an opportunity and a challenge for nvidia as it seeks to diversify its revenue streams [5].

insider trading activity

Analyzing recent insider trading activity provides additional context [3]. Several officers and directors have sold shares in recent months [3]. For instance, in December 2024, director Tench Coxe sold 1,000,000 shares at $131.26 [3]. In January 2025, Ajay K. Puri, an officer, sold a portion of his holdings [3]. Furthermore, CEO Huang Jen Hsun sold 120,000 shares on multiple occasions throughout august and september 2024, with prices ranging from $102.80 to $119.03 [3]. While not necessarily indicative of negative sentiment, these sales add another layer to the analysis of nvidia’s stock [3].

Bronnen

ai chips stock downgrade