Nvidia: Know The Difference Between 'Highly Valued' And 'Overvalued'

Nvidia Corporation NVDA shares dropped 8 percent Thursday following successive downgrades from BMO and Nomura analysts.

BMO said Nvidia was overvalued as strength in fundamentals wanes with competition shifts. Nomura suggested that investors turn to Intel Corporation INTC in reaction to underappreciation of a gaming slowdown.

Fellow market analysts responded with mixed sentiment.

Citron's Andrew Left told Benzinga, “[A]s good of a company as Nvidia is, the underlying business couldn’t keep up with the stock.”

Notes Of A Bull

However, Tigress analyst Ivan Feinseth told Benzinga Nvidia shares are “highly valued” — not “overvalued” — as the company’s fundamentals remain strong. Tigress currently has a Buy rating on the stock.

“It is trading at a premium because it’s anticipating a company that will grow into a concept,” Feinseth said. “The chips that they made for video will evolve into chips that will be used in processing data for artificial intelligence.”

Related Link: Nvidia Going Back To $90? Citron Thinks So

He acknowledged increasing competition from Skyworks Solutions Inc SWKS, Intel and other peers, but he said the company is poised to profit from its non-gaming segments.

“Their dominance in gaming is moving them into other areas, and that’s why the stock ran up,” he said. “Their ability to make the leading video cards and chips and the way that that analyzes a lot of data has moved them into this next phase. The gaming is not really the focus. The next phase in automotive applications in what will be used in self-driving cars.”

At last check, shares of Nvidia were down 9 percent at $100.74.