Curiously, it seems you can thank two investment banks -- both of which lowered their price targets on Nvidia today -- for the rebound.
In twin reports this morning, first Oppenheimer cut its price target on Nvidia to $300, and then banker Wedbush cut its target to $190, as TheFly.com reports today. Oppenheimer thinks Nvidia will outperform the stock market over the next year, while Wedbush is only neutral on the stock -- but if you look closely, you'll notice that both of these price targets are higher than where Nvidia stock is trading today, and suggest the shares will go up.
It's only a question of how much.
Both analysts agree, by the way, that when Nvidia reports its first-quarter earnings next week (on May 25), it's likely Nvidia will meet or even beat Wall Street's expectations. While video gaming sales may slacken, sales of server chips for data centers will pick up that slack and keep driving Nvidia's sales higher. What's of greater interest to investors, I suspect, is what happens for Nvidia after the Q1 numbers come out.
In Oppenheimer's view, Nvidia's sales will continue to grow for at least another quarter, and not slow before the third quarter -- and only then if global semiconductor supplies start coming back into balance with semiconductor demand. Wedbush thinks this could start to happen as early as the second quarter -- but again, it's a matter of degrees, and of timing. Everyone on Wall Street, it seems, is waiting to see when things go back to "normal" for Nvidia, and what normal will look like.
Now here's the good news: I actually think normal is going to be pretty fantastic for Nvidia. There's been a lot of finger-wagging at Nvidia for how the crypto craze has benefited its sales of fast-computing GPUs these past couple of years, and what will happen now that investors have fallen out of love with cryptocurrencies. But Nvidia was growing strongly even before the crypto phenomenon started driving the narrative. In fact, according to S&P Global Market Intelligence data, Nvidia has grown its sales 31% annually over the past five years, its gross profits 34%, its operating profits 39%, and its net profits 42%.
That's a strong, consistent growth trend, and one I don't expect to see upset by the sudden unpopularity of cryptocurrencies. If this is the new normal that Nvidia reverts to after crypto, I suspect investors are going to like this new normal just fine.