HSBC downgraded chipmaker Nvidia (NVDA) from a Buy to a Hold rating on Thursday after saying that the company’s pricing power for GPUs is becoming weaker. As a result, Nvidia’s stock dropped in today’s trading following the news. 4.3-star analyst Frank Lee explained that while Nvidia benefited from strong AI GPU pricing over the past two years, newer products like the B300 GPU and GB300 rack system haven’t shown major price increases compared to earlier versions.
Lee also mentioned that Nvidia’s upcoming Vera Rubin system doesn’t increase GPU count per rack. Instead, it stays at 72 GPUs, which is the same as the current Blackwell system, and that will not change until Rubin Ultra is released in 2027. Because of these concerns, Lee lowered his price target for Nvidia from $175 to $120 and reduced his earnings and revenue estimates for Fiscal Year 2026.
Despite the downgrade, Lee still sees long-term growth opportunities for Nvidia in areas like robotics and autonomous AI, as these markets could eventually help Nvidia expand. But in the near term, Nvidia might face a slowdown in demand from cloud service providers or a possible pause in orders from key AI players like DeepSeek, which could impact growth.
Is NVDA a Good Stock to Buy?
Overall, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 39 Buys and three Holds assigned in the past three months. Furthermore, the average NVDA price target of $176.54 per share implies an upside potential of 70.7% from current levels.
