Is the frenzy cooling down? Baird significantly halves Nvidia's target price, and Wall Street begins to settle the 2027 AI slowdown risks!
Today, Baird downgraded $NVDA from outperform to neutral, chopping the target price from 500 to 200 dollars, a reduction of 60%, an uncommon occurrence!
First, who is Baird? Does what they say carry weight?
• Established in 1919, it's a well-known American investment bank. Although not as famous as Goldman Sachs or Morgan Stanley, it has consistently conducted solid research in semiconductors, hard tech, and industrial manufacturing.
• The analyst responsible for Nvidia, Tristan Gerra, is a veteran in the semiconductor field. He doesn't follow market trends but focuses more on the real order situations in the supply chain and channel inventory data📊. He has consistently ranked in the top 4% on third-party lists like TipRanks.
It’s hard to imagine a generally bullish institution suddenly downgrading its rating; the market will not treat it as usual bearish sentiment but rather as a potential warning that cloud providers' capital expenditure might be reaching its peak!
Let's look at his logic; note that it’s not that B300 isn't selling now, but rather looking at 2027:
1️⃣Poor expectations on the supply side. Supply chain constraints may lead to widespread delays in data center deliveries in 2027.
2️⃣Unclear demand side. The AI capital expenditure growth of cloud giants is expected to slow down to 40% or even lower by 2027, with the channel side already showing signs of preemptive cuts of 10%-30%; order cuts may come earlier than everyone expects.
3️⃣Uncertainty from management. Baird clearly pointed out that Jensen Huang's term and steering rhythm after 2027 may become an implicit risk for valuation.
I personally believe that the media and investment institutions are being bearish on Nvidia mainly to gather cheap shares. One thing can be confirmed: Nvidia's fundamentals are still very strong, without a doubt. But market expectations have been raised too high, and once growth slows down, coupled with this variable from management, the pain of valuation being squeezed will remain a short-term test.
Hopefully we can squeeze some excess out, allowing $NVDA to drop below 150, so we can get on board!🤔
Of course, the viewpoint of one institution doesn’t represent absolute correctness; everyone should not blindly follow the trend, nor should they blindly bottom fish. This is for reference only; DYOR🙏
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