HSBC sees limited upside potential ahead for artificial intelligence darling Nvidia . Analyst Frank Lee downgraded shares of the chipmaker to hold from buy and cut his price target by $55 to $120, reflecting only more than 8% upside ahead, as of Wednesday’s close. “We expect Nvidia to deliver YoY sales growth of 62% and EPS growth of 58% in FY26e, while the current FY26e [price-to-earnings ratio] of 23x also does not look demanding to us,” Lee wrote in a note Thursday. “However, we now expect to see limited upside potential going forward given limited room for significant earnings upside surprise over the next 1-2 years and potential re-rating headwinds that we think are yet to be fully factored in by the market.” The stock has already come under significant pressure in 2025, spurred by developments from Chinese AI startup DeepSeek earlier in the year. Shares have fallen more than 27% over the past three months and about 8% over the past month, lagging the broader market. NVDA 3M mountain NVDA, 3-month Nvidia could experience less pricing power with its graphics processing units, or GPUs, Lee said, which could ultimately limit the stock’s earnings momentum. The analyst also sees “limited spec migration” with the company’s Vera Rubin, its next-generation GPUs slated to launch in 2026. “We first upgraded Nvidia to Buy in April 2023 on the back of Nvidia’s strong AI GPU pricing power and product mix being underestimated by the market that we believe has continued for past two years,” he wrote. “However, we now think Nvidia’s GPU pricing power is slowing down as we have seen no significant ASP boost between B200 and B300 GPU or the GB200 and GB300 NVL72 rack architecture.” Lee also pointed to other headwinds possibly in store for the stock, such as the potential slowdown in demand over the long term as a result of DeepSeek and increasing inconsistencies with the company’s supply chain. Lee’s neutral view is in the minority on Wall Street. He is among only five analysts with hold ratings on the name out of the 64 covering it, according to LSEG data. The remaining 59 analysts all have strong buy or buy ratings. Nvidia has an average target of nearly $173, implying more than 56% upside from here. Shares fell 6% during Thursday’s session. The move comes amid declines among other semiconductor stocks after President Donald Trump announced new reciprocal tariffs Wednesday.
