Goldman Sachs Downgrades Nvidia (NVDA) Amid Falling Crypto GPU Demand
This news comes a week after disappointing Q3 earnings results that included a very weak forecast. As a result, Goldman has cut its price target from $283 to $200, which is the third time the firm has reduced its outlook since October. Additionally, more than half of the 35 analysts who cover the stock have slashed their price targets.
According to Bloomberg, Goldman Sachs cited the channel inventory build and a correction in the company’s gaming division as the main reasons for its downgrade.
While we view the inventory correction in Gaming as a one-time reset as opposed to a change in the long-term growth profile, we believe it could take a few quarters before the market regains confidence in the growth trajectory of the business, especially given the weak economic backdrop.
Separate reports indicate that Nvidia is currently facing a surplus of its Pascal GPUs due to significantly reduced demand from the cryptocurrency mining community amid falling profitability.
“Gaming revenue was short of our expectations, and our fourth quarter outlook is impacted by excess channel inventory of midrange Pascal products,” Nvidia said.
Shares of Nvidia plummeted Friday following the downgrade, falling nearly 19% to $164.43, a new 52-week low. The Santa Clara-based company now has a $99.97 billion market cap.
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