Nvidia may see 'softening demand' for GPUs as resellers cut prices: Baird
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Nvidia (NASDAQ:NVDA) has been one of the largest beneficiaries of the GPU boom over the past five years, as the chips go into everything from autonomous vehicles to aiding machine learning and more.
But investment firm Baird notes that GPU inventories are rising, which may signal slowing demand.
Analyst Tristan Gerra, who rates Nvidia outperform with a $360 price target, noted that GPU inventories have risen in the supply chain after speaking to those in the industry, due to a number of factors, including weaker Asian demand, the Russian embargo and cryptocurrency miners selling hardware.
As a result, graphic card resellers have seen "below seasonal" revenue since December, with GPU prices having fallen 25% month-over-month this month, back to early 2021 prices.
That in and of itself wouldn't hurt Nvidia (NVDA), as it sells its GPUs at manufacturer's suggested retail price, but "current ASP trends reflect softening demand as card availability improves," Gerra wrote.
Nvidia (NVDA) shares were little changed in mid-day trading on Tuesday at $282.32.
Gerra also noted that Nvidia (NVDA) has seen strength in its data center business, record smart network interface card sales and recently announced a slew of new products at its GTC conference.
The analyst cautioned that Nvidia (NVDA) "so far" has no component orders, including for the gaming market, but it's possible that a "slowing in beat/raise" patterns could happen for Nvidia, including the potential for a "substantial" slowing in gaming, which accounts for roughly 45% of its revenue.
Earlier on Tuesday, investment firm Tigress boosted its price target on Nvidia (NVDA) to $410, following its GTC announcements.