NVIDIA’s had a strong year and will continue with its momentum till at least mid-2021. The company’s stock price has soared by an impressive 134% since the beginning of the year and will likely grow further in the coming months. At the same time though, there are some analysts who are wary of Team Green’s position.
As per the representative of New Street Research, the peak demand for NVIDIA’s latest GPUs and Data Center products will pass in the next six months, followed by a drop in the company’s stock value to approximately $400.
Analyst Pierre Ferragu explains in his notes that NVIDIA’s present stock price has already set all the expectations for the financial uplift provided by the newly launched products in both the gaming and Data Center Divisions. The industry expert believes that NVIDIA will soon start competing with itself in these segments, and being the leader will in turn result in strong expectations and trigger steep replacement cycles.
That would mean another (expected) strong quarter and guide, after which overheated expectations will likely lead to disappointment and a correction in the stock. Overall, this will weaken the growth potential significantly in the coming year, resulting in the stocks taking a dive.
Therefore, the analyst recommends selling NVIDIA shares before they fall to around $400, all the way from the present stock price of $550.