TLDR
- Citi analyst cut Nvidia’s price target from $210 to $200 while maintaining a Buy rating
- Broadcom’s new deals could potentially cost Nvidia up to $12 billion in future sales
- Nvidia stock fell 2.7% Friday and is down 8% over the past month
- China GPU shipments remain stalled but could provide upside if restarted
- Wall Street remains bullish with 35 of 39 analysts rating NVDA as a Buy
Nvidia faces fresh headwinds as Wall Street analysts sound alarm bells over mounting competition. Citi analyst Atif Malik delivered a reality check Monday, slashing his price target on the AI chip giant.
The new target sits at $200, down from $210. Malik kept his Buy rating intact despite the concerns.
Nvidia stock responded positively in premarket trading, climbing 0.6% to $168.07. This came after a bruising Friday session that saw shares drop 2.7%.
The stock has endured a rough patch recently. Over the past month, shares have tumbled 8% as multiple factors weigh on investor confidence.
Earnings disappointment triggered the initial selloff. But competition fears have made things worse.
Broadcom Emerges as Major Threat
Broadcom has emerged as the biggest worry for Nvidia bulls. The rival chip company recently reported strong results that caught investors’ attention.
More concerning for Nvidia was Broadcom’s announcement of new customer deals. These agreements suggest clients plan to use more Broadcom hardware instead of Nvidia’s graphics processing units.
Citi’s analysis paints a sobering picture of the potential impact. The firm estimates these deals could strip $12 billion in future sales from Nvidia.
That’s not pocket change for any company. The threat represents a real challenge to Nvidia’s dominance in AI chips.
Broadcom stock surged 9.41% as investors digested the implications. The company clearly benefits from any shift away from Nvidia hardware.
China Market Remains Wild Card
China adds another layer of uncertainty to Nvidia’s outlook. GPU shipments to the Chinese market remain frozen due to export restrictions.
Citi noted that a restart of China shipments could provide upside. However, the timing remains unclear given ongoing geopolitical tensions.
This uncertainty keeps investors on edge. China represents a massive potential market for AI chips.
For now, Nvidia must navigate without this revenue stream. The company continues to work within export guidelines while serving other markets.
The China situation could change quickly based on policy shifts. But investors can’t count on any near-term resolution.
Meta’s Mark Zuckerberg offered some reassurance over the weekend. He suggested his company might invest more than $600 billion in U.S. AI infrastructure through 2028.
Such massive spending could benefit the entire chip sector. Nvidia would likely capture a large portion of this demand given its market position.
J.P. Morgan analysts remain optimistic about the AI spending boom. They believe monetary conditions favor continued investment in the sector.
The broader AI theme appears strong enough to weather Nvidia’s current challenges. Multiple companies are racing to build AI capabilities.
Advanced Micro Devices gained 0.4% in premarket trading. The company offers another option for AI chip buyers.
Wall Street analysts haven’t given up on Nvidia despite recent concerns. Out of 39 analysts tracked over three months, 35 maintain Buy ratings.
Only three suggest Hold ratings. Just one analyst recommends selling the stock.
The average 12-month price target stands at $211.41. This implies 26.58% upside from current levels.
Nvidia stock currently trades at $168 in premarket sessions, showing some recovery from Friday’s decline.
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