- Nvidia’s (NVDA) stock fell more than 6% to $103.34 after hitting $102.01, driven by Trump’s tariffs impacting the semiconductor supply chain, with HSBC downgrading it to ‘Hold’ and cutting its price target from $175 to $120.
- Despite a projected 62% revenue increase and 58% EPS growth in fiscal 2026, HSBC sees limited upside due to weaker GPU pricing power, modest gains from the Vera Rubin platform until 2027, and supply chain challenges.
- Nvidia’s 32% drop from its 52-wkh of $153.13 reflects a transition phase, with HSBC slashing 2026 and 2027 EPS estimates by 8% and 18%, respectively, while eyeing robotics and autonomous AI as future growth drivers.
Nvidia (NVDA) stock slid 6.37% to $103.34 in early trading on Thursday, dipping as low as $102.01 during the session, as President Trump’s announcement of broad reciprocal tariffs sent ripples through the semiconductor supply chain. The news compounded existing pressures on the company, with HSBC downgrading Nvidia from ‘Buy’ to ‘Hold’ and slashing its price target from $175 to $120, a move that reflects a more cautious outlook. This downgrade underscores a shift in sentiment for a stock that’s already down 32% from its 52-week high, despite solid fourth-quarter results and first-quarter guidance that met Wall Street’s expectations.
HSBC’s revised stance hinges on Nvidia entering a transitional phase, where its once-robust growth in AI graphics processing units (GPUs) is losing steam. The brokerage highlighted weakening pricing power for Nvidia’s GPUs, noting that recent offerings like the B300 and GB300 NVL72 rack architecture haven’t delivered significant boosts in average selling prices, a stark contrast to the company’s prior success with premium AI products. Looking ahead, the upcoming Vera Rubin platform is expected to bring only modest gains until the Rubin Ultra upgrade arrives in 2027, tempering enthusiasm for near-term breakthroughs. Adding to this, HSBC pointed to supply chain mismatches and uncertainty around capital spending by cloud service providers and long-term demand from clients like DeepSeek, all of which could limit Nvidia’s upside potential.
Despite these headwinds, HSBC remains optimistic about Nvidia’s future, forecasting a 62% revenue jump and 58% earnings per share growth for fiscal 2026. However, the firm tempered expectations by cutting its earnings estimates by 8% for 2026 and 18% for 2027, while lowering its target price-to-earnings ratio from 34x to 25x, aligning it with historical lows. This recalibration suggests that the explosive earnings surprises that once fueled Nvidia’s meteoric rise may be harder to come by. The brokerage sees robotics and autonomous AI as the company’s next big opportunities, but meaningful revenue from these areas is still years away, leaving Nvidia in a holding pattern. With tariffs threatening to disrupt an already strained supply chain, Nvidia faces a complex road ahead as it navigates this pivot from its AI dominance to new frontiers.
WallStreetPit does not provide investment advice. All rights reserved.
Leave a Reply