Nvidia stock stumbles after Baird voices concern about graphics business
Shares of Nvidia Corp. shares were slipping Monday after an analyst took a more cautious outlook on the company’s gaming business.
Baird’s Tristan Gerra downgraded Nvidia’s stock
NVDA, -1.68% to neutral from outperform, writing of his concerns about excess inventory for consumer graphics processing units (GPUs). The shares were off 5.1% in afternoon trading.
“We believe order cancellations recently started in consumer GPUs, driven by excess inventories, a slowdown in consumer demand (reflected by an ongoing reduction in graphic cards pricing), slowdown in PC demand, and the Russia embargo,” he wrote in a note to clients.
Gerra thinks that the consensus view might be underestimating the percentage of Nvidia’s consumer GPU business that’s linked to Russia. Additionally, he believes that demand has dampened in China, which he said represents an estimated 25% to 30% of the market for consumer GPUs.
Further, he worries about the upcoming
Ethereum fork, which is expected to drive reselling of GPUs no longer needed for Ethereum mining. That dynamic could put additional pressure on prices, Gerra wrote...