Goldman Sachs, one of the biggest financial institutions, has lowered the rating of NVIDIA. This means that their stock won’t be so hot as before to traders and possible investors. This happens as a consequence of the poor results that NVIDIA obtained in Q3 2018. These results show the lack of crypto hardware demand that the mining industry is experimenting
Goldman Sachs Lowers NVIDIA Rating
Goldman Sachs, one of the world top share analyzer in the economic world, has decided to lower the rating of the stock of NVIDIA recently. The NVIDIA stock was listed before as “convinced”, a list of premium stocks that the institution recommends. The institution also declared that they were “clearly wrong on the stock,” while they corrected the rating.
NVIDIA share fell to the “buy level”. This means that the stock is still a good purchase. But the company behind it could be facing some drawbacks. Goldman’s slashed for a third time on the year the price forecast of the stock to $200. NVIDIA in suffering a terrible fourth quarter influenced by the lack of cryptocurrency related demand of their GPUs.
The value of their stock took a big hit due to the lowered forecast that its CEO Jensen Huang offered in their Q3 earnings call. It fell more than 30% just this month.
NVIDIA has two issues that are actively acting against it. First is the old inventory that is still filled with old gen GPUs still waiting for a cryptocurrency related buyer. NVIDIA failed to ascertain the true demand and was surprised by the bear market that came. This triggered Goldman’s report, that states:
“While we view the inventory correction in Gaming as a one-time reset as opposed to a change in the long-term growth profile, we believe it could take a few quarters before the market regains confidence in the growth trajectory of the business, especially given the weak economic backdrop,”
so they actively think that this situation can not be fixed easily.
The second thing is the lack of timing when pricing GPUs accordingly to the demand that the market presents. NVIDIA’s GPUs were still too expensive when cryptocurrency demand for these cards was already plunging.
However, there is still hope for them and its core businesses all over the world. Goldman Sachs stated that NVIDIA “has access to one of the best growth opportunity sets in Semis,” and a “sustainable competitive lead.”
Another behemoth that falters at the bear market.