Nvidia stock downgraded to Neutral by Daiwa Capital Markets
Yahoo Finance Live anchors discuss Daiwa Capital Markets downgrading Nvidia stock to Neutral and how the stock has fared this year.
Nvidia stock downgraded to Neutral by Daiwa Capital Markets
Yahoo Finance Live anchors discuss Daiwa Capital Markets downgrading Nvidia stock to Neutral and how the stock has fared this year.
Video Transcript
BRAD SMITH: Switching gears here, Nvidia hit with a downgrade from Daiwa Capital Markets, rating shares of the chip maker from outperform to neutral. Now, analyst Louis Massiara or Louis Masiocha says that citing recent government restrictions and weakening economy is setting up NVIDIA for plenty of future headwinds here.
I was looking through some of what they were looking at with the valuation specifically. They said a price to earnings ratio of 42 times their fiscal year 2023 earnings is just too high. They're actually using their new fiscal year 2025 or calendar year 2024 earnings per share estimate of $5.10 and a 26 times price to earnings ratio to set a new target price of $133 here for the stock.
BRIAN SOZZI: That is a material cut-- [CLEARS THROAT] excuse me-- in terms of valuation for NVIDIA. And the stock, I've seen it trade 60 to 70 times forward earnings. But it is warranted. Look what we have heard from NVIDIA over the past month. Remember, we were sitting here when they came out, and they warned.
And then they came out reported earnings last week. And it was a dismal quarter, dismal outlook. But despite all that, they have a lot of strong supporters on Wall Street. Most analysts on the Street rate this stock a buy because they are leading in so many areas in the chip market.
And look, it's going to be a company like this that gets re-embraced by the market when the market gets a little more comfortable with what the Fed is going to do moving forward.
BRAD SMITH: Yeah, absolutely. We've been continuing to keep an eye on shares of NVIDIA. As I mentioned, volume for this one was one of the only ones in the mega-cap tech stocks that was actually up during the month of August. And why? Because it was so dismal. There were so many warnings that were taking place, the warning and then the actual earnings that dropped as well.
BRIAN SOZZI: Bad news equals page views. That's what I was taught.