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Adding to the recent pain for Nvidia (NVDA) was a downgrade by HSBC from “Buy” to “Hold,” with its price target cut from $175 to $120. The company’s GPU pricing power stalled, according to analyst Frank Lee, as a result of a lack of average selling price momentum on the B200 to B300 chips as well as the GB200 to GB300 NVL72 rack platforms.
Lee opined that although the long-term potential of autonomous systems and AI robotics can increase Nvidia’s addressable market, these drivers are far away. Near-term threats include a peak in hyperscaler demand as well as growing competition from DeepSeek.
About Nvidia Stock
Nvidia (NVDA) is a Santa Clara, California-based semiconductor giant. It dominates the GPU market and has become the foundation of generative artificial intelligence (AI) infrastructure. Nvidia is currently one of the most valuable firms in the world, with a market cap of $2.38 trillion.
The stock is up more than 20% over the past 52 weeks, but its shares have struggled in the year to date, down 21.5%. The stock is currently more than 30% off its all-time high.
Nvidia’s forward price-earnings multiple is 22.7x. Its price-sales multiple is 17.6x and its price-cash flow multiple is 30.8x. It has a profit margin of 55.85%, a return on equity of 112.33%, and a debt-equity ratio of a mere 0.11x. It continues to be very profitable and financially strong.
Nvidia Tops Q4 Earnings Forecasts
Nvidia’s recent earnings have consistently beaten expectations. For the quarter ending January 2025, the company reported EPS of $0.85 versus a $0.79 consensus. This was its fourth consecutive quarter of beating earnings estimates.
When the company next reports earnings, the average EPS estimate is $0.87, ranging from a high of $0.92 to a low of $0.86. Analysts forecast $0.97 for the next quarter.
The full-year EPS targets are $4.16 for fiscal 2026 and $5.15 for fiscal 2027, compared to $2.93 in its fiscal 2025.
The high valuation of Nvidia is supported by these strong growth rates, though a slowdown in demand and pricing power could burden future margins.
What Do Analysts Expect for Nvidia Stock?
Even as HSBC has turned bearish on Nvidia, the overall analyst community continues to be positive. Based on 43 different analysts, Nvidia has a "Strong Buy" consensus rating. 37 rank the stock a “Strong Buy,” two a “Moderate Buy,” and four a “Hold.” This breakdown has not meaningfully shifted over the last three months, indicating high confidence in Nvidia’s long-term leadership in AI computing.
The average rating has risen from 4.74 previously to 4.77 currently, on a 5-point scale. The sustained analyst support for Nvidia reflects a belief that short-term issues can be eclipsed by structural growth in AI over the long term.
