There are a lot of Wall Street analysts who are positive about Nvidia Corp.’s stock, but on Friday, there were a few more analysts who were neutral.
In an industry report he called a “health check” on AI stocks, Pierre Ferragu, an analyst at New Street Research, lowered Nvidia shares NVDA, -1.91% from “buy” to “neutral.” Eight of the 62 analysts that FactSet follows now have neutral or similar opinions on Nvidia’s stock.
Ferragu thinks that “upside will only materialise in a bull case, in which the outlook beyond 2025 increases materially,” but he doesn’t think that this will happen yet.
He says that most predictions say that sales of graphics processing units will grow by 35% by 2025.
“The quality of the franchise is still there, though, and we would buy it again, but only if it was on long-term sale,” Ferragu wrote.
In the early hours of Friday morning, Nvidia stock was down 1.3%. The stock had dropped 6.5% since June 18, when it hit an all-time high of $135.58. Ferragu thinks the shares should be worth $135.
“Nvidia is still the best brand for AI data centres, but near-term expectations and the stock’s price make it worth being more cautious,” Ferragu wrote.
The other AI stocks he covers are still getting his attention, especially shares of Advanced Micro Devices Inc. AMD, +4.88% and Taiwan Semiconductor Manufacturing Co. Ltd. TSM, +0.82% 2330. Agu said that both stocks have “strong upside in both our base and high scenarios.”
He thinks AMD’s stock is worth 35 times what he thinks it will earn per share in 2027, which is $10. That means the price should reach $345 in 2026. Ferragu, on the other hand, wants it to reach $235 in 12 months, which is 38% higher than where it is now.
In terms of Taiwan Semiconductor, he thinks the price will reach NT$1,470 in 2026 and NT$1,200 in one year. The 12-month goal means that prices will go up about 19% from where they are now.
For the first time since early 2023, when he said that AI hardware spending would slow down, Ferragu said that he sees “expectations for AI semis aligned with capacity planning in the supply chain” and also “aligned with the expansion of demand beyond hyperscalers.”
“We still see very strong growth ahead and upside potential in most names we cover,” Ferragu wrote. “This doesn’t mean the end of the trend.” “However, it does mean that investors need to be more selective about the trends they follow.”
