Shares of Nvidia (NVDA 1.95%) continued to tumble on Friday, falling as much as 8%. As of 1:41 p.m. ET, the stock was still down 7.5%, capping off a week when shares dropped roughly 10%.
While the chipmaker was no doubt caught up in the broader market decline, bearish comments by a pair of Wall Street analysts added further pressure to its stock price.
Wells Fargo analyst Aaron Rakers lowered his price target on Nvidia to $250, down from $370, while maintaining his overweight (buy) rating on the stock, according to The Fly. He expects solid growth from Nvidia's data center segment when the company reports its fiscal 2023 first-quarter results next week. That said, the analyst will be listening closely to management commentary regarding demand visibility, momentum, and progress for the Hopper product cycle. Rakers posits that any signs of weakness or decelerating growth wouldn't be warmly received by investors.
At the same time Louis Miscioscia of Daiwa sounded the bearish alarm for the entire semiconductor industry, saying he foresees a "danger zone" over the coming six months. Until now, demand for semiconductors "remains strong with beat and raise results," but he believes the market is telegraphing the coming of a recession. The analyst said that until we have more clarity on the overall economic picture, the market "could continue to be driven to new low levels due to fear and uncertainty."
It's important to put this news in context. In its fiscal 2022 fourth quarter (ended Jan. 30, 2022), Nvidia generated record quarterly revenue of $7.64 billion, up 53% year over year, as well as record-setting sales from each of its major operating segments. Profits were even stronger, with earnings per share of $1.18, which soared 103%.
Not every quarter will be a record breaker. The potential for slower demand in the coming months, or even the specter of a recession, shouldn't be of any consequence to long-term investors. By their very nature, investment banks think in terms of the coming three months. However, investors looking out three to five years will recognize this as background noise and instead focus on Nvidia's industry-leading position and massive opportunity.