Nvidia shares (NVDA -4.18%) continued to fall on Friday, falling sharply as 4.5%. From 11:29 a.m. ET, the stock was down 3.1%, coming out on the week when the stock was down about 13%.
While stocks have undoubtedly been caught up in the broader market downturn, Wall Street analysts' low comments about the state of the sector have added additional pressure to the share price.
So What
Trust analyst William Stein has painted a bleak picture of the semiconductor industry, at least in the near future, While keeping the purchase price on Nvidia shares, he reduced his company's 12-month stock price from $ 347 to $ 298. Even after the change, however, this still represents a 23% higher rate for investors compared to Thursday's closing price.
Stein noted the rapid and unexpected drop in chip orders earlier this week. "On Wednesday afternoon we heard about the negative shift in signal demand from a network of computers, consumers, and communications OEMs to at least some of their suppliers," he wrote in a client research book.
He sees the change as "strong evidence" of the near-term winds of some recent chip makers. Stein quickly pointed out that cuts were limited in the second quarter and the need for the remainder of 2022 was still strong. Although he sees the winds as a temporary phenomenon, he fears that the situation may be "enough" to push the industry into a normal decline in the cycle.
Now What
It is important to put these issues in context. In the fourth quarter, Nvidia produced a record revenue of $ 7.64 billion, up 53% year-on-year, driven by record-setting sales for each major operational phase. Profits were equally strong, as profits per share (EPS) of $ 1.18 increased by 103%.
The ability to weaken a need in the near future, or even to reduce it, is not the result of long-term vision. Although investment banks are focused on the next three months, investors looking for three to five years should take it as it is: a temporary noise that can be ignored.
