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Investing.com - Lynx Equity has downgraded Nvidia (NASDAQ:NVDA) ahead of the company’s earnings report, maintaining its $160 price target but expressing concerns about the stock’s future performance. The stock currently trades near its 52-week high of $184.48, with a P/E ratio of 58x and remarkable revenue growth of 86% year-over-year. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with 20+ additional key insights available to subscribers.
The research firm cited negative reception of OpenAI’s GPT-5 model as a key factor in its downgrade, noting that "reviews of GPT-5 are in and they have been, with few exceptions, uniformly negative." According to Lynx, OpenAI was forced to bring back older GPT-4 models due to user backlash, and at least one hackathon event was reportedly canceled. Despite these concerns, Nvidia maintains excellent financial health with a 70% gross margin and strong cash flows that adequately cover its moderate debt levels.
Lynx established that GPT-5 runs on Nvidia’s NVL72 platform, specifically the GB200 GPU with the highest memory density. The firm expressed concern that poor GPT-5 adoption could impact demand for Nvidia’s GB200 chips, suggesting that popular LLMs like Deepseek, Llama and Claude may prefer to remain with the Hopper series due to "lower initial cost and less demanding power/cooling needs."
The research firm also highlighted tariff concerns, noting that Nvidia now faces "having to pay a hefty tax of 15% of revenue for exports to China." Lynx warned that export taxes might be imposed for additional countries, creating further headline risk for the stock.
Despite these concerns, Lynx acknowledged that Nvidia is "likely to provide a monster guidance for FQ3 as CSPs build GB200 capacity for training workloads," potentially causing a short-term spike in the stock price, but concluded that "in the days and weeks ahead though we think the stock is likely to fade." For a deeper understanding of Nvidia’s valuation and future prospects, InvestingPro subscribers can access comprehensive research reports with detailed analysis of the company’s financial health, growth prospects, and market position.
In other recent news, Nvidia is gearing up for its upcoming earnings report, with Morgan Stanley projecting October revenue at $52.5 billion, while acknowledging that some estimates reach as high as $55 billion. Deepwater Asset Management’s Gene Munster believes that Wall Street’s growth estimates for Nvidia in 2026 are too conservative, suggesting they could be revised from a 27% to a 30-35% top-line growth expectation. Meanwhile, Nvidia has made its Jetson AGX Thor developer kit and production modules available, designed to enhance robotics applications with significant improvements in AI computing power and energy efficiency.
Cantor Fitzgerald has reiterated its Overweight rating on Nvidia, emphasizing the company’s strong position in AI infrastructure spending, which is supported by increased capital expenditure forecasts from major tech companies. In related developments, China’s chipmakers are planning to triple their AI chip output by 2026, with Huawei setting up facilities dedicated to AI chip production by the end of 2025. These developments highlight the rapidly evolving landscape in AI and semiconductor technology.
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