FX168 Financial News (Asia Pacific) News Artificial intelligence (AI) is trending, and almost all Wall Street analysts are optimistic about NVIDIA (NVIDIA). However, New Street Research analyst Pierre Ferragu rarely downgraded Nvidia's rating. He believes that unless there is a bull market, there is limited room for future growth, so he adjusted the rating to “neutral.” Experts have warned that this could trigger a bigger Bitcoin crash.
Since the beginning of the year, Nvidia's stock price has risen by 155.52%. The closing report was 125.83 US dollars last weekend, and the market capitalization exceeded 3.1 trillion US dollars. At one point, it surpassed Apple and Microsoft to become the largest company in the world by market capitalization. #AI热潮 #
New Street Research analyst Pierre Ferragu downgraded Nvidia's rating from “buy” to “neutral.”
(Source: Bloomberg)
He explained that Nvidia has reached full valuation 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 for further growth.
He pointed out that the only possible room for growth exists only in the case of a bull market, that is, the outlook after 2025 has improved drastically, but there is currently not enough confidence in this. He also stressed that although Nvidia's brand quality remains the same, if the current market situation does not improve, its brand valuation may face the risk of being lowered.
However, according to Bloomberg data, nearly 90% of analysts still recommend buying Nvidia shares, so Ferragu's downgrade is particularly individual. However, it is undeniable that Nvidia's current trading price is more than 22 times the expected revenue for the next 12 months, making it the most expensive stock in the S&P 500 index, and valuation issues have received frequent attention as a result.
New Street Research finally set Nvidia's one-year target price of $135 per share, 4% lower than the company's all-time high of $140.76, but 7.3% higher than last Friday's closing price of $125.83.
CoinDesk previously stated that highly synchronized fluctuations between Bitcoin and Nvidia have raised concerns among market experts. Experts believe that if the AI bubble bursts, it could drag down the cryptocurrency market.
From the beginning of the year to March 15, Bitcoin rose 60%, while Nvidia rose 77.5%. The 90-day correlation between the two had risen to 0.86 at the time, the highest level since May 2023.
(Source: CoinDesk)
The correlation coefficient above 0.8 indicates that Bitcoin and Nvidia are highly correlated and tend to fluctuate synchronously. Therefore, if Nvidia's stock price starts to plummet, there is a high possibility that Bitcoin will fall at the same time.
However, it is worth noting that these data occurred before March of this year. Since then, Nvidia has repeatedly reached new highs, while Bitcoin has stagnated and retracted more than 26% from the high point due to negative news such as repayments from the German government and Mt. Gox, the largest crypto exchange in the past.
This means that the correlation between Bitcoin and Nvidia showed signs of a slight decline, and it remains to be seen whether it stabilizes again in the future.
However, if Nvidia does plummet, it is expected that with limited hot money, the performance of Bitcoin and even global risk assets may be dragged down.