Wall Street firm Summit Insights Group has turned bearish on Nvidia (NVDA) stock.
The boutique research firm that specializes in technology companies is the lone company to downgrade NVDA stock after the chipmaker reported fourth-quarter 2024 financial results. While Nvidia reported that its sales rose 78% and its profit grew 80% during the final quarter of last year, that growth rate wasn’t enough for Summit Insights.
Consequently, KinNgai Chan, a top five-star rated analyst with a 70% success rate, downgraded NVDA stock to a Hold rating from Buy previously, citing concerns that less computing power will be needed for developing large language models and artificial intelligence (AI) applications.
Risk vs. Reward
“We believe risk-reward is no longer favorable for the stock,” wrote Chan in his post-earnings note on Nvidia. “While we think the data center capex growth for the training market will continue to benefit NVDA, we believe the lower computing power requirement for inference, while not evident today, will undoubtedly have a negative impact to NVDA’s financial performance.”
While Summit Insights Group was the only Wall Street firm to downgrade NVDA stock immediately after the company’s Q4 print, several analysts have raised similar concerns about future demand for Nvidia’s expensive high-powered microchips, especially after the emergence of Chinese AI app DeepSeek that was developed for only $6 million and uses Nvidia’s older and less powerful H800 chips.
NVDA stock is down 3% after its latest financial results were made public. Over the last year, the company’s share price has gained 63%.
Is NVDA Stock a Buy?
Nvidia’s stock currently has a consensus Strong Buy rating among 33 Wall Street analysts. That rating is based on 31 Buy and two Hold recommendations assigned in the last three months. The average NVDA price target of $179.77 implies 41.13% upside from current levels.
