As a result, it could put pressure on Nvidia's ability to gain leverage, even though its adjusted EBIT margins are expected to remain consistent. NVIDIA adjusted EPS change % consensus estimates (S&P Cap IQ)Īlso, investors need to consider that Nvidia's revenue and adjusted EPS growth could continue to decelerate significantly moving forward. NVIDIA revenue change % and adjusted EBIT margins % consensus estimates (S&P Cap IQ) As a result, we don't think investors should expect a further lift-off in NVDA stock despite the upturn in China's COVID fortunes. However, we believe the market has already anticipated the lifting of lockdowns in its recent May bottom, with its validated bear trap. Notwithstanding, the recent easing of lockdowns in China should help lift the market sentiments. Furthermore, Nvidia was caught flat-footed by China's COVID lockdowns and stoppage of sales in Russia. As seen above, data center's 83.1% YoY revenue surge in FQ1'23 was insufficient to lift its declining revenue growth trend. Nvidia's growth momentum from 2021 has clearly decelerated as it laps challenging comps and lower ASPs for its gaming cards. NVIDIA gaming and data center revenue change % (Company filings) We will reassess our rating after observing more constructive signals from its re-test.Ĭonsequently, we revise our rating on NVDA stock from Buy to Hold.
Therefore, we have also revised its fair value, considering the most updated estimates.Īccordingly, we believe it's time to turn cautious (not bearish) as we await the re-test of its near-term resistance. Moreover, NVDA remains mired in negative flow (bearish momentum), even though it's at a near-term bottom, with a validated bear trap. The following bull trap in March, following its Spring GTC, was significant, as it set the stage for NVDA stock to move into negative flow (bearish momentum). We had anticipated that the digression in its November bull trap could have been completed, but we were wrong. We were neutral on the stock for most of 2021, but turned bullish in 2022. Notwithstanding, the Street's analysts remain bullish on NVDA stock, with 35/43 Buy or Strong Buy ratings. Furthermore, Nvidia's growth could be slowing moving forward, as the consensus estimates were reduced markedly. Given its embedded growth premium, it has also suffered the brunt of the recent semi stocks sell-off, as investors bailed out of high multiple growth stocks.
Nvidia ( NASDAQ: NVDA) stock has been battered massively, falling more than 45% below its November 2021 bull trap. Justin Sullivan/Getty Images News Investment Thesis
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