Goldman Sachs removed Nvidia Corp. from its conviction list, saying it was “clearly wrong on the stock,” underestimating both a channel inventory build and a correction in the company’s gaming division. This comes after Thursday’s disappointing results from the chipmaker that included a weak forecast.
The bank also cut its price target to US$200. According to Bloomberg data, the target had been at US$283, and Friday’s move represents the third time Goldman has cut its Nvidia target since October.
“While we view the inventory correction in Gaming as a one-time reset as opposed to a change in the long-term growth profile, we believe it could take a few quarters before the market regains confidence in the growth trajectory of the business, especially given the weak economic backdrop,” the firm wrote to clients.
Nvidia shares slumped 18 per cent in pre-market trading, putting it on track to sharply extend a recent sell-off that has already erased 30 per cent of its value since Oct 1. The stock is poised to open at its lowest level since September 2017.
Goldman kept its buy rating on the stock, writing that it still “has access to one of the best growth opportunity sets in Semis,” along with a “sustainable competitive lead.”