NEW YORK (AP) — Shares of Nvidia Corp. fell Friday after a Cantor Fitzgerald analyst downgraded Nvidia shares and tech bellwether Intel lowered its third-quarter sales forecast.
THE SPARK: Analyst Dale Pfau downgraded shares of Nvidia to “Hold” from “Buy” and cut his price target to $13.50 from $20. Meanwhile, Intel cut its third-quarter revenue forecast by more than $1 billion because the tough economy is hurting demand for its chips. About 80 percent of personal computers include Intel chips, making the company an important indicator of spending on computers
THE BIG PICTURE: Nvidia, of Santa Clara, Calif., makes graphics chips and processors for PCs, tablets and other devices. A month ago the company reported strong second-quarter results that included sales of products used in tablet computers and strong gains in graphics processing. It also forecast third-quarter revenue that surpassed Wall Street expectations.
THE ANALYSIS: Pfau said Nvidia gets about 80 percent of its revenue from older parts of the PC market where there is going to be little or no growth. He said the rest of its revenue comes from consumer products like graphics chips, and the stock price already reflects Nvidia’s success in those markets.
But several analysts remain upbeat on Nvidia. Wedbush analyst Betsy Van Hees maintained an “Outperform” rating and a $20 price target on Nvidia shares, saying she expects the company’s graphics chips to gain market share.
THE BIG PICTURE: SHARE ACTION: Nvidia stock declined 29 cents, or 2.1 percent, to $13.44 in afternoon trading. It had dropped as low as $12.95 earlier in the day.
Shares are down about 6 percent in the past month. They’ve traded between $11.47 and $16.90 over the past year.