Nvidia rarely has its target price lowered; this year's US stock market volatility has intensified
About Nvidia's Rare Target Price Downgrade
HSBC: Downgraded the target price from $195 per share to $185 per share (based on a 32 times PE valuation), and also lowered Nvidia's earnings per share forecast for the fiscal year 2026 by 6%.
Reason: It is expected that Nvidia's GB200 supply chain issues will continue into the first half of the fiscal year 2026 (from February 2025 to July 2025), resulting in limited "upside" growth potential for Nvidia in the first half, and greater pressure in the second half (from August 2025 to January 2026).
It is believed that the supply chain issues for GB200 still exist, especially in ODM assembly. HSBC also added that it is currently difficult to pinpoint the specific location of the GB200 supply chain issues, particularly as Nvidia's GB200 rack server architecture becomes increasingly complex. Previously, HSBC had also expressed concerns about issues such as copper connection modules from Amphenol, but these problems are expected to be resolved before the first quarter of the fiscal year 2026.
About Volatility
Nvidia experienced a significant fluctuation within 6 trading days, first surging by 10% and then dropping by 10%, indicating very high volatility. Specifically, the surge was driven by speculation around CES expectations, while the drop was due to CES not meeting expectations.
However, the root cause is the increased volatility in the broader market, namely the heightened volatility in U.S. stocks, which superficially appears to be due to the pause in interest rate cuts caused by inflation, but in reality, it is due to the excessive gains in U.S. stocks and high valuations. With U.S. stocks at historical highs and interest rates close to 5%, how can there not be volatility?
25-Year Investment Strategy Outlook: Embrace High Volatility!
As I mentioned before, volatility will increase in 2025, making short-term operations on heavyweight stocks more challenging. It is recommended to buy low and sell high; chasing high prices will be difficult in 2025, while bottom-fishing strategies may be more effective
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