What happened
It wasn't good to be a tech stock on Thursday, and it was doubly uncomfortable to be Nvidia (NVDA -3.33%). The graphics card and autonomous driving solutions specialist saw its share price tumble by more than 4%, while the S&P 500 index "only" fell at a 2.5% pace on the back of a bearish new analyst report.
So what
That report came from HSBC analyst Frank Lee, who initiated coverage of Nvidia stock in the morning before market open. Unfortunately for the tech company's investors, Lee launched his tracking of the shares with a reduce (i.e., sell) recommendation. He set his price target at $136 per share.
The prognosticator's take is based largely on price and valuation, as he feels the company still has plenty of room for expansion. He wrote that
We are bullish on Nvidia's revenue growth potential in 5-10 years, as the company is a leading supplier of chips for autos, Artificial Intelligence (AI) enterprise software, and its own Omniverse software used for AI and metaverse applications.
He added that Nvidia's total addressable market is a whopping $400 billion. However, he also pointed out that the potentially huge automotive market will account for only an estimated 3% of company sales this year.
Now what
Nvidia's stock is also being dinged these days by its association with cryptocurrency, since its more powerful graphics processing units (GPUs) are used in the mining of proof-of-work coins and tokens. Lee's new report won't help improve sentiment on the company, but it's a strong player in the graphics segment, and even this new bear admits it has a bright future ahead of it.
