Around 26 out of the 37 analysts covering NVIDIA (NVDA) have given the stock “buy” ratings, while 11 have given it “holds.” No analysts have given the stock “sells.” Analysts have set a target price of $194.25 on the stock with a median consensus estimate of $190.00. NVIDIA is now trading at a 27.4% discount to its consensus median target estimate.
Jefferies Group slashed its price target on NVIDIA stock to $185 from $246 after the graphics chip maker significantly reduced its upcoming fourth-quarter sales guidance, citing sluggish demand in China. The guidance indicated that NVIDIA stock is under pressure and is likely to disappoint investors in the fourth quarter of fiscal 2019. The semiconductor giant also failed to meet analysts’ expectations in the third quarter, when its earnings and revenue missed analysts’ estimates by 4.7% and 1.9%, respectively.
NVIDIA, the maker of graphics chips for the gaming and AI spaces, earns more than 85% of its revenue from four platforms: gaming, data centers, professional visualization, and automotive. Rivals AMD (AMD) and Intel (INTC) compete with NVIDIA in the data center and automotive markets.
The company foresees softer-than-expected sales in the gaming and data center spaces due to sluggish demand in China. Investors were already cautious about the rising inventory of older gaming chips amid the slowdown in the cryptocurrency market. Weaker-than-expected demand for new chips released in August, as well as soft demand for NVIDIA’s chips in data centers, added to the inventory pileup.