Amid the AI craze, the stock price of Nvidia, led by Huang Renxun, has soared by more than 161.22% this year, and its market value has exceeded US$3.1 trillion. It once overtook Apple and Microsoft and became the world's largest company by market value. It also led to the outstanding performance of the Taiwan stock market. The Taiwan Weighted Index hit a new high of 23,556.59 points this week, and TSMC exceeded the thousand-dollar mark.
New Street downgrades Huida
But on this occasion, New Street Research analyst Pierre Ferragu downgraded NVIDIA's rating from "buy" to "neutral." Ferragu said the stock is "fully valued" after rising nearly 240% in 2023 and surging 154% this year. He believes that NVIDIA's rapid rise since the beginning of last year has reached a point where there is no room to continue to climb.
Ferragu noted that the only possible upside would only exist in a bull case, where the outlook improves significantly after 2025, but it's not yet possible to have enough confidence in that. He also emphasized that although NVIDIA's brand quality remains unchanged, if the current market situation does not improve, its brand valuation may face the risk of downward revision.
However, Bloomberg data shows that nearly 90% of analysts still recommend buying NVIDIA stock, so Ferragu's downgrade appears particularly isolated. But it is undeniable that NVIDIA is currently trading at more than 22 times expected revenue for the next 12 months, making it the most expensive stock in the S&P 500 Index, and valuation issues have frequently come into focus.
New Street Research ultimately set its one-year price target for NVIDIA at $135 per share, 4% below the company's all-time high of $140.76 but 7.3% above Friday's closing price of $125.83.
Will it crash Bitcoin?
It is worth noting that Coindesk has reported in recent years that the highly synchronized fluctuations between Bitcoin and NVIDIA have caused concerns among market experts. Experts believe that if the AI bubble bursts, it could drag down the cryptocurrency market.
During the period from March 15th at the beginning of the year, Bitcoin rose by 60% and NVIDIA rose by 77.5%. The 90-day correlation between the two had risen to 0.86 at that time, the highest level since May 2023. A correlation coefficient of more than 0.8 indicates that Bitcoin and NVIDIA fluctuations are highly correlated and tend to fluctuate simultaneously. Therefore, if NVIDIA's stock price starts to plummet, there is a high chance that Bitcoin will fall in tandem.
However, these data occurred before March this year. Since then, NVIDIA has continued to reach new highs, while Bitcoin has stagnated and retraced more than 10% from its highs amid bad news such as the German government and Mt. Gox repayment. 26%, the correlation between the two is no longer as good as before.
However, if NVIDIA really plummets, it is expected that with limited hot money, the performance of Bitcoin and even global risk assets may also be dragged down.
