Why Nvidia Stock Dropped Today
What happened
Since kicking off its virtual Graphics Technology Conference 2022 (GTC 2022) on Monday, Nvidia (NASDAQ: NVDA) has published (by my count) about 15 separate press releases, touting, among other things:
- Major updates to its artificial intelligence platform.
- A new Grace CPU "superchip."
- An "energy-efficient AI supercomputer" for advanced robotics and autonomous machines.
- New "NVIDIA Omniverse" features for game developers working with virtual reality.
And yet shares of the semiconductor stock are falling -- down 3.1% as of 10 a.m. ET Wednesday.
Image source: Getty Images.
So what
As a Reuters article covering Tuesday's announcements makes clear, artificial intelligence seems to be Nvidia's primary emphasis at this conference. That article quoted CEO Jensen Huang, who said: "Data centers are becoming AI factories, processing and refining mountains of data to produce intelligence." It also quoted Bob O'Donnell, chief analyst at TECHnalysis Research, who asserted that Nvidia's latest advances make it a greater threat to the data center and cloud computing businesses of Intel (NASDAQ: INTC) and AMD (NASDAQ: AMD).
But not everyone is impressed.
On the one hand, JPMorgan analyst Harlan Sur observed Wednesday morning that Nvidia remains "1-2 steps ahead of its competitors" in the fields of artificial intelligence, high-performance computing, gaming, and autonomous vehicles, too. On the other hand, TheFly.com points out that Barclays Capital, Citigroup -- and JPMorgan, too! -- are maintaining the exact same $350 price targets on Nvidia stock that they had before GTC 2022 commenced.
Now what
Granted, Nvidia stock costs only about $260 today, so a $350 price target implies a generous upside potential of 35%. Granted, too, all three of these banks have buy ratings on Nvidia.
But the fact remains: Nothing that the chipmaker has said over the past two days -- not one out of the 15 separate press release announcements -- was sufficiently impressive to encourage any of these banks to shift their stances and raise their price targets on the stock. As Barclays commented, the product announcements have so far been largely as expected, and Nvidia's management didn't raise its guidance at all.
So why is Nvidia stock down Wednesday? Investors simply wanted more -- and they didn't get it.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends Barclays and recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.
