New Street Research analysts have downgraded Nvidia (NASDAQ:NVDA) stock to Neutral from Buy, according to a note released on Friday.
The AI chipmaker’s shares fell less than 1% ahead of the market open.
The independent research firm noted that consensus expectations imply GPU revenues will increase by 35% in 2025, which aligns with their previous forecast, adding that they “see limited further upside based on what we hear from the value chain.”
“We downgrade the stock to Neutral today, as upside will only materialize in a bull case, in which the outlook beyond 2025 increases materially, and we do not have the conviction on this scenario playing out yet,” analysts wrote.
New Street Research said that consensus currently projects revenue growth to slow to mid-teens, a rate that could be at risk given the potential slowdown in hyperscale capital expenditures and increasing competition from ASICs and AMD (NASDAQ:AMD).
If the outlook remains unchanged, analysts said they do not foresee further upside in the stock. Instead, they warn of a potential risk of derating, as the stock currently trades at 40x next twelve months earnings per share (NTM EPS), compared to a trough of 20x when growth slowed to 10% in 2019, before recovering to 35x.
The firm values Nvidia at 35x earnings, in line with the late 2019 and early 2020 multiple. With an estimated EPS of $4.1 in 2027, this translates into a target price of $143 in 2026, indicating limited upside over the next two years.
New Street set its one-year target price for NVDA at $135, implying around 5% upside from current levels.
“The quality of the franchise is nevertheless intact, and we would be buyers again, but only on prolonged weakness,” analysts concluded.
