New Street Research analyst Pierre Ferragu has downgraded Nvidia Corp. from buy to neutral, citing the stock as "getting fully valued" after a significant rally. The stock has surged 157% this year and almost 240% in 2023, leading to concerns about limited upside potential. Ferragu highlighted that additional upside would only materialize in a bullish scenario beyond 2025, which the firm does not currently have conviction in. While acknowledging the quality of Nvidia's franchise, there is a risk of a potential derating if the current outlook remains unchanged. The company's market capitalization has increased by $1.9 trillion, making it the second-best performer among S&P 500 components. Despite the downgrade, it is noted that analyst downgrades are rare for Nvidia, which has been a major beneficiary of the artificial intelligence spending boom. The stock is currently trading at nearly 23 times estimated revenue for the next 12 months, making it the most expensive stock in the S&P 500 Index by this measure. New Street Research has set a one-year price target of $135 for Nvidia, reflecting a 5% upside from its most recent close. Additionally, the firm is positive on Advanced Micro Devices Inc. and Taiwan Semiconductor Manufacturing Co Ltd., citing their growth trends and valuations. The article also mentions that any negative opinion on Nvidia is rare on Wall Street, with the majority of analysts recommending buying the stock. The summary captures the key points from the various articles, including the reasons for the downgrade, the stock's performance, valuation concerns, and the broader outlook for the semiconductor industry.
