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Rodolfo Campos uses a virtual reality headset during a NASA Hybrid Reality Lab demonstration at the Nvidia GPU Technology Conference.
Saul Loeb / AFP / Getty Images
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Bank of America Merrill Lynch is less optimistic about
Nvidia
(Ticker: NVDA) stocks upside down AMD reported weakness in its business graphics.
The firm's analyst Vivek Arya lowered his price target to $ 300 from $ 360 for Nvidia shares, quoting AMD's disappointing sales and outlook.
"AMD awarded weaker results to soften graphics card (GPU) channel sell-through … which would take a few quarters to work through," Arya wrote on Thursday. "This is a negative read for NVDA's 2H18 PC gaming business."
AMD
is Nvidia's biggest competitor in the graphics chip business for PC gaming and data-center applications.
On Wednesday, AMD said its Computing and Graphics segment underperformed its expectations by $ 100 million in the third quarter, which was "entirely" driven by the graphics business. The company added that inventory levels for AMD's graphics products remain elevated in the retail channel.
Despite the downshift in its expectations, Arya reiterated its buy rating for NVIDIA's stock due to its exposure to important technology growth trends.
We "view current risk-reward profile as especially attractive. NVDA remains the most unique insurer in the world of technology and intelligence (AI), gaming, and autonomous cars, "he wrote.
Nvidia's stock is down significantly this month. Its shares are less than 25% month to date, while the
iShares PHLX Semiconductor ETF
(SOXX), which tracks a broken index, has fallen about 14%. Investors have been more concerned about the sector's fundamentals in recent weeks.
The stock bounced back 5% on Thursday after dropping 10% the next trading session has a big technology selloff.
Nvidia is slated to report its results for the fiscal third quarter on Nov. 15.
Write to Tae Kim at [email protected]
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