Why This Top-Rated Analyst Just Downgraded Nvidia Stock (NVDA)
Nvidia (NASDAQ: NVDA) took a hit after HSBC analyst Frank Lee downgraded the stock from Buy to Hold, citing concerns about weakening GPU pricing power. Shares slipped over 4% following the announcement, as the market reacted swiftly to the reassessment of near-term momentum.
- Lee noted that Nvidia’s pricing strength, a key driver in the AI boom, is starting to soften as new products come to market without major price hikes.
- Flagship offerings like the B300 GPU and GB300 rack system have failed to show meaningful premium pricing over their predecessors, raising concerns about margin sustainability.
This shift in pricing dynamics suggests that Nvidia’s once-dominant position in AI hardware may be facing competitive and demand-side headwinds.
Vera Rubin and Flat GPU Scaling
In what may have further disappointed analysts, Nvidia’s upcoming Vera Rubin system will feature no increase in GPU count per rack, maintaining the current ceiling of 72 GPUs set by the Blackwell architecture.
- Lee emphasized that this lack of expansion limits throughput efficiency, potentially delaying infrastructure upgrades among hyperscalers.
- The next major leap—Rubin Ultra—is not expected until 2027, making the interim growth story less compelling.
As a result of these hardware stagnation concerns, Lee slashed his price target from $175 to $120, while also lowering revenue and earnings projections for Fiscal Year 2026.
Long-Term AI Vision Still Intact
Despite trimming his near-term outlook, Lee acknowledged Nvidia’s strong long-term positioning, particularly in emerging verticals like robotics and autonomous AI systems.
- These future-focused domains could generate diversified revenue streams, especially as AI applications shift from training to real-world deployment.
- Nvidia’s continued dominance in CUDA software and AI infrastructure gives it a technological moat that may be harder for rivals to erode.
However, the short-term uncertainty—especially around demand from cloud service providers and potential order pauses from AI innovators like DeepSeek—adds pressure to the company’s near-future growth narrative.
Analyst Sentiment Remains Bullish
While HSBC’s downgrade introduces caution, Wall Street analysts remain overwhelmingly bullish on NVDA stock. Over the past three months, 39 Buy ratings and three Hold ratings have been issued, reflecting widespread confidence in the stock’s trajectory.
- The average price target for Nvidia now sits at $176.54 per share, implying a 70.7% upside from current levels.
- This divergence in opinion highlights a tension between short-term valuation concerns and long-term growth optimism.
For investors, the takeaway is clear: Nvidia remains a core AI play, but expectations must be tempered in the near term as the company adjusts to slower pricing momentum and evolving hardware cycles.