- Seaport maintains the only “sell” rating on NVIDIA, targeting a 21% drop amid concerns over accounting and competition.
- Analyst Jay Goldberg highlights $26 billion in prepaid cloud commitments and large investment obligations.
- Growing rivalry from Google TPUs and other AI hardware is cited as a risk.
- Morgan Stanley raises its Nvidia price target to $250, citing strong AI demand.
- Nvidia announces a $2 billion investment in Synopsys and reports strong retail investor sentiment.
Nvidia continues to face scrutiny from Seaport Research Partners analyst Jay Goldberg, who reaffirmed his “sell” rating on Sunday. Goldberg set a price target of $140 per share, which is about 21% lower than Nvidia‘s recent close at $177. This stance comes amid a year where Nvidia stock has climbed 33%.
Goldberg pointed to what he described as “opaque accounting” and rising industry competition as the basis for his negative outlook, as reported by CNBC. He highlighted $26 billion in prepaid cloud compute expenses, which Nvidia says fund research and development and are tied to their DGX cloud platform. Goldberg views these as backstop commitments to support customer capacity and as potential financial liabilities.
In addition, he noted that Nvidia has increased its working capital, spending $6 billion on investments in private companies this year and taking on $17 billion in future commitments, including $5 billion to Intel. Goldberg also mentioned a yet-unsigned arrangement with OpenAI that could add $100 billion more to obligations.
Competition from Google is increasing as its Tensor Processing Units (TPUs) become more effective, with Goldberg noting performance advantages over Nvidia chips in some scenarios and broader TPU adoption among external developers.
On the other hand, Morgan Stanley expressed confidence in Nvidia, keeping its “overweight” rating and raising its price target to $250. Analyst Joseph Moore stated that the central issue for customers is the ability to acquire enough Nvidia products, particularly the new Vera Rubin chips.
Nvidia CEO Jensen Huang addressed competition concerns during a Monday interview, stating that GPU-accelerated computing remains in high demand and downplaying threats from TPUs or ASICs. Huang emphasized the company’s experience competing against alternative hardware and underscored strengths in their CUDA software and GPU architecture. He also noted that any future business with China would be a “bonus opportunity,” as current demand remains strong without it.
In a separate announcement, Nvidia revealed a $2 billion investment in Synopsys to support extended industrial design and engineering projects. The partnership will see Synopsys integrating Nvidia’s CUDA-X suite, AI-Physics tools, and Omniverse simulation platform to boost compute-heavy engineering work.
Retail investor sentiment toward Nvidia remains bullish, with traders describing the stock as a “safe haven” for those transitioning from Bitcoin and anticipating positive movement compared to other technology shares.
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