Adam Clark
Nvidia stock was falling early Wednesday as the stock received a rare negative rating from a Wall Street analyst, and the market digests a disappointing outlook from artificial-intelligence server maker Super Micro Computer.
Seaport Research analyst Jay Goldberg initiated coverage of Nvidia stock with a Sell rating and a $100 target price on Wednesday, citing the likelihood of the AI spending boom slowing in 2026 and difficulties of installing the company's latest hardware.
"Our research indicates significant complexity required for deployments of Nvidia systems in comparison to traditional data centers -- cooling, configuration and orchestration challenges throughout the supply chain," Goldberg wrote in a research report.
The analyst noted that all of Nvidia's largest customers are also looking to design their own chips.
Nvidia shares were down 3.5% at $105.20 in early Wednesday trading. Tuesday, the stock had gained 0.3%.
The Seaport analyst is going against the consensus view. There are no Sell ratings on the stock among Wall Street analysts polled by FactSet, who have an average price target of $161.59 for the shares.
In respect to alternatives to Nvidia, Morgan Stanley's technology team previously estimated the custom AI-chip share of the market stood at 11% in 2024, and will rise to 15% in 2030, with the balance going to AI graphics-processing units, primarily made by Nvidia.
Meantime, disappointing news from AI server maker Super Micro raised questions for Nvidia. It noted "delayed customer platform decisions" as it warned results for its latest quarter would fall short of expectations.
Super Micro's servers often house Nvidia chips. That suggests the issue could be around the transition between Nvidia's older Hopper hardware and its new Blackwell processors, with customers waiting to install the newest chips.
While Super Micro stock dove following the results, it shouldn't be such a major concern for Nvidia so long as it can ramp up sales of Blackwell hardware to meet the demand.
Meta Platforms and Microsoft are reporting earnings Wednesday, when the key figure for Nvidia will be their capital expenditure. Nvidia stockholders will be hoping the two tech giants stick to, or even raise, their guidance for capex and signal they will continue investing in AI data centers, as well as being attentive to their commentary on custom chips.
Among other chip makers, Advanced Micro Devices stock was down 2.8% Wednesday, and Broadcom shares were falling 2.7% in early trading.
Write to Adam Clark at adam.clark@barrons.com
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April 30, 2025 09:59 ET (13:59 GMT)
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