In the past few weeks, investors have seen an increase in downgrades or reductions of price targets in the semiconductor industry by different analysts. Nvidia (NVDA 0.35%) has not been immune to these downgrades; in the past few days, Truist Securities and Baird have downgraded or reduced their price target for the stock. One of the biggest concerns from most analysts is the risk of consumer spending decreasing.
- On Monday, Baird downgraded Nvidia to neutral and reduced its price target from $360 to $225. Nvidia's stock price was down over 5% when the market closed Monday afternoon. Some of the risks cited are the slowdown in consumer spending, especially in China's consumer market, and headwinds caused by the Russian embargo.
- Numerous online reports mention that graphics card prices are decreasing from peaks in third-party markets. A quick look at eBay's (EBAY -0.61%) completed listings shows that graphics cards are still selling way above the manufacturer's suggested retail price (MSRP). As third-party prices are still above MSRP, it might be too early to tell what will happen to the graphics consumer market.
- Unlike many analysts, long-term investors focus on how a stock will do in the next few years and not in the next few months. While consumer spending might be slowing down, which could cause more downtrends for the semiconductor industry, there are also numerous growth opportunities. One of those opportunities is cloud providers and enterprises' increased spending to improve their digital solutions.
Click the video below for my full thoughts and analysis.
*Stock prices used are the closing prices of April 11, 2022. The video was published on April 11, 2022.