Nvidia's Stock Faces Pressure as Analysts Cut Price Targets

Nvidia's stock outlook dims significantly as analysts lower their price targets amid a decline in gross margins and potential regulatory hurdles. Investors should approach with caution as competitive pressures rise.

Date: 22-04-2025

AI Rating: 5

Analyst Price Target Cuts
Recently, more than seven Wall Street analysts have cut their price targets for Nvidia significantly, indicating a bearish sentiment surrounding the company's stock. Notable reductions include a cut from $200 to $160 by Bank of America Securities and from $175 to $150 by Piper Sandler. These adjustments may stem from concerns regarding Nvidia's long-term revenue potential amidst increasing competition in the AI-GPU space.

Gross Margin Decline
Nvidia's GAAP gross margin has declined from 78.4% in Q1 2025 to an estimated 70.6% in Q1 2026, reflecting pressures from both competition and the depletion of AI-GPU scarcity. Lower gross margins typically hint at reduced profitability moving forward, which can negatively affect stock valuation.

Trade Restrictions Impacting Revenue
A regulatory filing indicating a potential hit up to $5.5 billion due to export restrictions to China highlights another key concern. Nvidia's need for special licensing to export its H20 chips not only limits revenue growth but hints at a more complex operational landscape that could further depress stock performance.

Increasing Competition and Internal Development
Nvidia faces stiff competition as many of its large customers, collectively termed the "Magnificent Seven," begin developing their AI-GPUs internally. Though these might not be as advanced, the longevity of high demand for Nvidia's products is persistently threatened, ushering in a potential shift in market dynamics that could erode Nvidia's leading position.

Investor Sentiment and Market Correction
Amid the optimism that once characterized Nvidia's rapid growth, a palpable sense of caution prevails as expectations may have been overstated. As AI technology continues to develop, the pressure to evolve may dissuade companies from investing aggressively in Nvidia's latest offerings, leading to market overcorrections that can adversely affect stock prices. Overall, the combination of lower price targets, declining gross margins, export restrictions, competitive threats, and shifting investor sentiment poses significant challenges for Nvidia's stock in the near term.

Stocks: NVDA BAC