Nvidia downgraded to Neutral by New Street Research

New Street Research analysts downgrade chipmaker Nvidia (NVDA) to a Neutral rating. Yahoo Finance Head of News Myles Udland joins the Market Domination team to discuss the analyst call.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video Transcript

Let us get now to our call of the day, New Street Research downgrades NVIDIA to neutral the analyst citing limited further upside for the tech giant going forward.

And uh Josh, we were just talking about this real quickly over the break and uh this is uh some bad news to drop on a Friday, you know.

Um but yes, we’re talking about it.

Um When we think about this, you know, the the run that NVIDIA has had, there are a lot of valuation calls, you can make 1 100 and 50%.

Why not stop here?

Um So what’s next?

I think, you know, the outlook beyond 2025 it requires a bit of faith, but uh that’s what’s kind of gotten the stock here.

Yeah, I mean, really, it sounds like you.

So this analyst says he dams is a neutral, says, look in that NVIDIA is getting fully valued for the base case says upside will only materialize in a bold case in which the outlook beyond 2025.

He says increases materially and we do not have the conviction on that scenario playing out yet goes on to say, Jared, the quality of the franchise.

He tells his it’s, it’s intact.

Sounds like it’s evaluation calls an issue here.

Well, if we go to a chart, let me just point out what happened last year, there was five or maybe even six months when NVIDIA basically did nothing.

And so this is a two year chart on the Wi Fi Interactive.

It’s gone up so far from then that it’s hard to see and probably hard to remember because it’s gone up most of this year.

But we had a good five months or so and then it just kind of petered off, didn’t really get started again until the beginning of the year.

So, you know, maybe it takes a prolonged uh not, not necessarily even correction and price, but maybe in time to get people interested in again.

Um But, you know, NVIDIA, that’s what it’s done.

It’s a textbook rally where, you know, you consolidate, you move to the next level and then you start all over again.

That’s it.

All right.

We need another voice on, on all things, NVIDIA, all things markets here with more on video and the markets is Yahoo finance his very own miles, Lyn.

Um I didn’t know you were allowed to downgrade NVIDIA.

Is that only on Friday after?

No?

Well, you’re only 1/4 only allowed to do it on Friday afternoons after July 4th.

Story continues

Otherwise, you know, too many people might see the call.

But no, I thought that the point was Jared was just making on the technicals for NVIDIA.

Um at this point in the proceedings, really feels like the German one because when it comes to the fundamental case, you know, what more is there to say it is trading at a very expensive, well, OK, an optically expensive valuation, let’s say, right, you know, 2027 it actually looks reasonable, all this kind of stuff that analysts will, will go through.

But the stock chart itself and this is the challenge I think for a lot of, you know, portfolio managers who often times are more fundamentally biased is if you look at the chart for a lot of the names, you know, metas in this group that have just had these huge runs, you need to take a look around and ask yourself like not only where is the next bid, but what is constructive, you know, as technical analysts say about this set up, right?

Like why has this stock proven that it is worth this over X amount of time?

And therefore there’s going to be a large incremental base of new buyers.

And the NVIDIA even the line chart here shows very clearly that while, you know, there’s some shades of gray there, uh the base between the he and 21 to what we saw in 2023 there’s a lot of folks there for two years made no money in and then you have the A I trade come along and all of a sudden you’ve got this, you know, pop one several 100% points.

But, you know, Jared, it feels like you, I mean, you taught me years ago you can correct through price or time and it feels like NVIDIA at a minimum needs some time in this low 100 twenties after the split.

Yeah, I mean, it makes sense.

Um, you know, the earnings catalyst seems like, uh, NVIDIA gets one or two big pops a year.

So maybe it’s already had its share.

But you know, the elephant in the room is that NVIDIA is the elephant in the room.

Uh There’s the concentration we’re seeing in the market here has never been higher.

You go back to the Great Depression.

So we are in uncharted territory and it’s, it’s logical to think.

Well, what happens if this one stock falters?

Well, today NVIDIA is in the red and you got five other mega caps in the green.

So it’s all right.

But I mean, what if they fall?

Um I think it’s a legitimate argument and it’s a concern but the market can, uh you know, it can stay concentrated for far longer than you or I can remain solvent.

Yeah.

Well, you know that last point I, I’m, I’m peeking your screen here, the Wi Fi Interactive um of, of the names that are, you know, moving the market higher today overall.

And, you know, I just put a story up on Yahoo.

Finance.

It’s nothing else to do in this office.

No meetings.

No, nothing.

Right.

So, let’s do some work.