Why Nvidia Stock Got Trounced on Thursday
What happened
A victim of the recent sell-offs in tech stocks, Nvidia (NASDAQ: NVDA) had another tough session on the market Thursday. The company's stock took a 1.5% hit on the day because of an analyst's price-target cut. That decline was slightly steeper than the 1.1% fall of the S&P 500 index.
So what
The cutting prognosticator was Vijay Rakesh of Mizuho Securities. Rakesh trimmed the level he feels is ideal for Nvidia stock to $205 per share, from his previous $225. He remains a believer in it, however, as he maintained his buy recommendation.
Rakesh was particularly eyeing the hyperscale market -- the massive companies that require vast amounts of computing power and are willing to spend capital to acquire this power.
In the analyst's estimation, this crucial segment of the market will continue to be robust throughout the year albeit with modest "pushbacks." Next year might be a different story, however, with curbs in spending from some hyperscalers due to concerns about the wider economy.
Now what
Such a take isn't helping improve sentiment on Nvidia, which is already being buffeted by several headwinds. As a big name in tech stocks, it's suffered from investor migration away from such titles into assets considered to be less risky. Among other factors, the crypto winter is affecting Nvidia's operations since it's a top supplier of the graphics processing units (GPUs) used in mining cryptocurrencies like Bitcoin.
Having said that, Nvidia is still very strong in many aspects of its business, including the provision of solutions for assisted and autonomous driving -- certain to remain a hot area for years to come.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Nvidia. The Motley Fool has a disclosure policy.
