Things just got a little more exciting this Friday as Wall Street analysts just threw us a curveball on Nvidia. As I’ve stated before in previous writings, while news on Nvidia may seem like the annoying catchphrase your teenage son keeps throwing around… this breaking news is definitely worth discussing. 

(Source: Giphy) 

As we all know, Nvidia is the darling of AI that is no doubt every millennial traders favorite bluechip “stonk”. However, as degenerate tech traders continue piling into call options with their rent money… analysts have just slapped this AI behemoth with a rare downgrade. 

(Source: Giphy) 

So what gives? 

According to reports, New Street Research analyst Pierre Ferragu decided to rain on Nvidia’s parade by downgrading the stock from a "buy" to a "neutral." His rationale? Nvidia's stock is getting "fully valued" after a jaw-dropping 156% surge this year, on top of a 240% rise in 2023. 

(Source: Bloomberg) 

Basically, Ferragu thinks the stock is like the overpriced Vanilla Bean frappuccinos my wife continues to buy. Sure they are good… but when you pull out the credit card, it’s definitely not worth the price.  

Now although Ferragu’s downgrade wasn’t a full on “sell”, it did cause a blip in Nvidia’s price action today. Shares dipped as much as 2% on this news, while the Nasdaq 100 Index was busy having a good day, up nearly 1%. 

(Source: Barrons) 

Yet, in the midst of most Nvidia investors feeling left out of the Nasdaq rally today, this downgrade also comes just a few days after CEO Jensen Huang had a field day with his personal Nvidia shares. 

Earlier in the week reports came out that Huang unloaded shares worth $169 million in June. Obviously, this was a huge payday for the 61 year old tech genius -but as if pocketing nearly $200 million needed an additional award, this cash-in has catapulted Huang into the ultra-ultra rich club with a net worth of $100 billion. In short, the guy is friggin 'winning at life. 

(Source: X) 

But remember, the Nvidia Paradox? Yeah it’s flashing its goodies more than ever as Nvidia execs and directors have collectively sold over $700 million worth of shares in the first half of the year. That’s more money than I can comprehend, and I’ve tried.

So despite the downgrade, Nvidia peeps are still killing it. And while this downgrade may flash warning signs on the AI bubble - analysts believe that AI-related demand, especially for memory chips, is still strong. 

In fact, Samsung recently posted a profit boost, thanks to high demand for memory chips likely to be used in Nvidia’s AI processors. Which is still good news for the Nvidia guys. 

(Source: UPI) 

But again, according to Ferragu himself, Nvidia has hit a bit of a ceiling for now. The rating displays a one-year price target of $135 for Nvidia, which is pretty close to its recent trading price of around $128.28. 

So clearly, Ferragu is not saying Nvidia’s going to crash and burn, but instead future gains might be a bit like my New Year’s resolution to go to the gym—unlikely but not impossible. In fact, now that I’m thinking about it, I don’t think I even made it to the gym at all. Geez… 

(Source: Giphy) 

But alas, my personal failures in self-development, Nvidia’s recently rare downgrade is still a reminder that even the stock market’s golden child isn’t immune to a bit of tough love. 

And even though the company’s fundamentals are still strong, it’s a good idea to keep an eye on the broader market trends and maybe diversify a bit. 

So if you’re an Nvidia investor today, keep calm and remember, the stock market’s a marathon, not a sprint (no matter what other traders brag about on reddit). And hey, if all else fails with Nvidia, there’s always Nokia’s AI resurgence to look at. 

(Source: Reddit) 

Stocks.News doesn't have any positions in the companies mentioned in the article.