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Investors are keeping cautious on Nvidia (NVDA) shares today after Super Micro Computer (SMCI) reported devastating preliminary results for its third fiscal financial quarter.
SMCI came in below Street estimates in Q3 due to “delayed customer platform decisions” and “higher inventory for older generation products,” as per its press release on Tuesday, April 29.
NVDA stock is down in symptahy with Supermicro at writing due to their close business association. Supermicro is a major supplier for AI servers that incorporate Nvidia chips.
So, its disappointing release for the third quarter raises some concerns about the overall demand for Nvidia products.
Why Do SMCI Earnings Bode Poorly for Nvidia Stock?
According to Amit Daryanani, a senior Evercore ISI analyst, order pushouts and higher inventory for older generation products that Supermicro talked about in its earnings release likely suggest “SMCI is more Hopper-skewed while customers are opting to wait for Blackwell to ramp.”
While that isn’t necessarily a long-term negative for Nvidia stock, delayed purchasing decisions could still lead to some near-term softness in revenue growth at NVDA.
Concerns of such an AI slowdown, together with a tariff-driven rout in the U.S. tech stocks, have already weighed significantly on Nvidia shares this year, which are currently down about 30% versus their year-to-date high.
NVDA Shares Get a Rare ‘Sell’ Rating
Note that Nvidia is also currently grappling with added restrictions that President Donald Trump has slapped on the export of its H20 chips to China.
In fact, the government’s export controls could result in a more than $5.5 billion hit to the AI darling’s earnings in Q1, its management warned last week.
Together, these concerns made Seaport initiate coverage of NVDA shares today with a rare “Sell” rating. The firm’s analyst, Jay Goldberg, announced a $100 price target on the chipmaker in his research note, indicating potential downside of about 5% from here.
“Nvidia is one of the leading beneficiaries of the current AI spending boom, but its prospects are well understood and largely priced into the stock,” he told clients on Wednesday.
Should You Invest in Nvidia at Current Levels?
Not everyone on Wall Street is as dovish on Nvidia shares as Seaport, though.
According to Barchart, the AI stock still enjoys a consensus “Strong Buy” rating with the mean target of about $167 signalling potential upside of nearly 60% from current levels.
