2024-07-10 21:04:33 ET
Summary
- We're downgrading Wall Street's AI darling, Nvidia, to a hold after a +844% run since our upgrade to buy in October 2022.
- We expect NVDA to beat on revenue but guide softer than expected for October quarter.
- With a current market cap of over $3T, NVDA's stock price is anticipating a July quarter beat and an October quarter guide-up.
- Any softness in its outlook may result in a material pullback, i.e. an air pocket.
- We believe the channel inventory build creates near-term outlook risk in the October quarter and recommend investors trim ahead of the call this quarter and load up on the pullback.
We're downgrading Wall Street's AI darling, Nvidia ( NVDA ). We've been buy-rated on NVDA since our upgrade from sell to buy back in October 2022, titled "Nvidia: Reversing Course, Now Bullish Due To Data Center Demand" after our thesis on NVDA's crypto-exposure bust played out. The stock is up +844% since, as shown below. Our positive thesis on NVDA being a unique player during the AI moment played out. Jensen had prepared the perfect AI product before he knew its potential TAM, and it did well for him. Since our last article on the stock in late November, "Nvidia Q3 - Still Buy: Another Beat And Raise," the stock went up from around $492 to above $1,000 pre-split. We're now downgrading the stock to a hold after the triple-digit growth and would recommend investors trim ahead of next quarter as we see the long-awaited air pocket. We expect a material pullback in management's guidance for its October quarter....
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Nvidia: Downgrading Wall Street's AI Darling - Trim Ahead Of The Air Pocket