- With Ethereum ($ETH) down over 40% from the peak, mining volumes should decline in the next six months, crypto demand for graphics processing units will "die," and excess mining GPUs will hit the gaming market New Street analyst Pierre Ferragu tells.
- Ferragu's research note is partially titled "What could a crypto winter look like?".
- In addition, excess shipments could result in excess channel inventories and "eventually in a steep correction over the summer," notes Ferragu.
- The analyst believes NVIDIA Corp (NASDAQ:NVDA) could anticipate this situation and reduce shipments "less aggressively but sooner," avoiding inventory buildup.
- Nonetheless, he thinks this dynamic could drive a "steep pull back" in Nvidia shares.
- If the stock reacts as it did in 2018, there is a "material downside" to $150, Ferragu mentions.
- However, he "would buy the weakness without hesitation," saying that after the flush of excess gaming GPUs, Nvidia would return to its "healthy growth trajectory," and the shares could recover to $300.
- Ferragu reiterated a Neutral rating on Nvidia with a $250 price target (4.2% upside).
- Price Action: NVDA shares traded higher by 0.21% at $239.98 on the last check Friday.
