Wedbush downgrades Nvidia without a ‘negative catalyst’

Shares of Nvidia Corporation (NASDAQ: NVDA) have climbed about 50% in just over a month to trade at $304 versus $131 at the start of the year. But Wedbush Securities’ Matt Bryson says this is as far as it goes.

In a note this morning, Bryson downgraded Nvidia to “neutral” with a price target of $300 that represents a downside of roughly 1.0% from here. Interestingly, he previously had a PT of $220 on the stock, which means he raised his price target significantly but not above the current stock price.

Bryson defends his call on CNBC’s “TechCheck”

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On CNBC’s “TechCheck”, Bryson agreed that the downgrade was unusual since there wasn’t any “negative catalyst” to support the call.  

Fundamentally, there’s nothing wrong with Nvidia. It’s just that the stock entered October at $200, and now it’s about 50% higher; how do you justify that move over the last month. What changed, yes conditions are better but not better enough.

The Wedbush analyst is even convinced that Nvidia will report upbeat results for Q3 next week with “constructive guidance” for the future but said there’s no other stock in the semiconductor space that trades at “65x his two-year out earnings estimate” that makes it impossible for him to raise his PT on Nvidia beyond where it currently trades.

Metaverse could disrupt his thesis

Bryson, however, warns that he might be wrong with this call since Nvidia is a notable player of the AI and Metaverse space, the growth trajectory of which is a bit hard to predict. He added:

I could be wrong in the sense that AI growth could happen at a faster pace, the Metaverse could show up more quickly than I anticipate, and clearly graphics are a very important piece of that puzzle.

The news comes only days after Nvidia partnered with Luminar Technologies Inc for lidar sensors it will use in its self-driving technology suite.