On July 8, artificial intelligence (AI) was a hot topic, and almost all Wall Street analysts were optimistic about NVIDIA. However, New Street Research analyst Pierre Ferragu rarely downgraded NVIDIA's rating. He believed that unless in a bull market, there would be limited room for future growth, so he adjusted the rating to "neutral". Experts warned that this could trigger a bigger crash in Bitcoin.
Since the beginning of the year, Nvidia's stock price has risen by 155.52%, closing at $125.83 last weekend, with a market value of over $3.1 trillion, surpassing Apple and Microsoft to become the world's largest company by market value. #美国6月非农数据高于预期
New Street Research analyst Pierre Ferragu downgraded Nvidia's rating from "buy" to "neutral."
He explained that Nvidia is fully valued after rising nearly 240% in 2023 and surging 154% this year. He believes that Nvidia's rapid rise since the beginning of last year has reached a point where there is no room to continue climbing.
He pointed out that the only possible upside is in the bull market scenario, that is, the outlook improves significantly after 2025, but there is not enough confidence in this at present. He also emphasized that although Nvidia's brand quality remains unchanged, its brand valuation may face the risk of downward adjustment if the current market situation does not improve.
However, Bloomberg data shows that nearly 90% of analysts still recommend buying Nvidia shares, so Ferragu's downgrade is particularly unique. But it is undeniable that Nvidia is currently trading at more than 22 times its expected revenue in the next 12 months, making it the most expensive stock in the S&P 500 index, and valuation issues are therefore frequently in the spotlight.
New Street Research ultimately set Nvidia's one-year price target at $135 per share, 4% below the company's all-time high of $140.76, but 7.3% above Friday's closing price of $125.83.
CoinDesk previously noted that the highly synchronized movements between Bitcoin and Nvidia have raised concerns among market experts, who believe that if the AI bubble bursts, it could drag down the cryptocurrency market.
Since March 15, the beginning of the year, Bitcoin has risen 60%, while Nvidia has risen 77.5%. The 90-day correlation coefficient between the two has risen to 0.86 at the time, the highest level since May 2023.
A correlation coefficient of over 0.8 shows that Bitcoin and Nvidia are highly correlated and tend to move in sync. Therefore, if Nvidia's stock price starts to plummet, there is a high probability that Bitcoin will also fall in sync.
But it is worth noting that these data occurred before March this year. Since then, Nvidia has continued to set new highs, while Bitcoin has stagnated and has retreated more than 26% from its highs due to negative news such as the German government and the repayment of Mt.Gox, the former largest cryptocurrency exchange.
This means that the correlation between Bitcoin and Nvidia has shown signs of a slight decline, and whether it will stabilize again in the future remains to be seen.
However, if Nvidia really plummets, it is expected that with limited hot money, the performance of Bitcoin and even global risk assets may also be dragged down.
