Why NVIDIA Corporation (NVDA) Fell Sharply Today

NVIDIA Corporation (NASDAQ:NVDA) has fallen 6% today after Michael McConnell of Pacific Crest lowered his rating to ‘Underweight’ from ‘Sector Weight’. McConnell is bearish on the stock due to what he believes are ‘signs of desktop GPU market saturation, lower margins from incremental Nintendo Switch revenue and a possible pause in its Datacenter business this summer’.

Earlier in the week, some traders were watching NVIDIA for signs of weakness due to Apple Inc. (NASDAQ:AAPL) announcing that it will drop the use of Imagination Technologies’ IP in 15-24 months. Instead of using Imagination’s services, Apple has implied that it might use its own in-house graphics technology. The news is relevant to NVIDIA because some traders fear Apple could eventually do the same for GPUs in MAC laptops. As it currently stands, AMD and Nvidia laptop GPUs are still top-tier and many investors aren’t too concerned about that possibility.

With that said, shares of NVIDIA could also be soft due to profit taking. The stock has surged sharply over the last few quarters and some investors could be taking some money off the table.

What Does The Smart Money Sentiment Say?

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According to our data, hedge fund sentiment around NVIDIA has been mixed. Of the 742 elite funds we track, 35 funds owned $2.5 billion of NVIDIA Corporation (NASDAQ:NVDA) and accounted for 4.30% of the float on December 31, versus 51 funds and $1.9 billion respectively on September 30.

The Bottom Line

NVIDIA Corporation (NASDAQ:NVDA) shares are lower today due to an analyst downgrade. For another interesting read, check out the ‘6 Least Technologically Advanced States in America‘.


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