New Street Research Downgrades NVIDIA Amid Uncertain Growth Outlook

New Street Research analysts downgraded NVIDIA (NASDAQ:NVDA) to Neutral from Buy with a price target of $135 on the stock. The analysts explained that current consensus expectations project a 35% increase in GPU revenues for 2025, aligning with previous predictions. They see limited further upside based on information from the value chain. The downgrade to Neutral reflects a belief that significant upside will only occur under a bullish scenario where the outlook beyond 2025 improves significantly, a scenario the analysts do not yet fully support.

The analysts also noted that the current consensus anticipates revenue growth slowing to the mid-teens, potentially threatened by slowing hyperscale capital expenditures and increased competition from ASICs and AMD. If these factors remain constant, the analysts see no further upside for NVIDIA stock and even a risk of derating, as the stock is currently trading at 40 times next-twelve-months EPS, compared to a trough of 20 times when growth slowed to 10% in 2019.