Nvidia Stock Gets Price-Target Hikes. Why the Shares Are Falling.

Nvidia chips are the preferred choice for training artificial-intelligence models. (Courtesy Argonne National Laboratory)

Key Points

• Nvidia shares dropped, aligning with broader market trends and other chip makers.
• Analysts Rick Schafer and Christopher Rolland raised Nvidia’s target price to $265 and $230, respectively, citing strong AI positioning.
• AI startup Anthropic plans to invest $50 billion in American data-center infrastructure, potentially using Nvidia processors.

Nvidia stock dropped in Thursday trading. Concerns about the artificial-intelligence trade looked to be outweighing positive assessments by analysts ahead of the chip maker’s earnings next week.

Nvidia shares were down 2.6% at $188.70 in morning trading, broadly in line with the broader market. An apparent rotation away from technology stocks sent Nvidia and other chip makers lower. Advanced Micro Devices was down 2.2% and Broadcom was off 3%.

“We’re seeing a classic rotation underway. Investors are taking some profits in mega-cap tech after an extended AI driven run and reallocating toward more reasonably valued sectors,” wrote David Miller, CIO and senior portfolio manager at Catalyst Funds, in a research note.

Created with Highcharts 9.0.1NvidiaStock ticker: NVDASource: FactSetAs of Nov. 13

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The focus for Nvidia investors should be on earnings, due on Nov. 19. Those will come amid a debate about potentially stretched valuations for companies linked to the AI boom.

Investors might be fretting about further updates from famed Big Short investor Michael Burry. The fund manager recently disclosed bets against Nvidia and AI software company Palantir via his Scion Asset Management.

However, Burry now appears to be closing Scion and planning a new venture. A filing with the Securities and Exchange Commission shows the registration of Scion Asset Management was terminated on Monday. Registration is required for funds with over $100 million in assets.

In a post on social media platform X on Wednesday, Burry said, “On to much better things Nov 25th.”

That could be ominous for Nvidia if Burry intends to continue his public campaign against the AI trade. However, Wall Street is generally upbeat.

“Nvidia remains best positioned to win in AI,” wrote Oppenheimer analyst Rick Schafer in a research note, as he raised his target price on the stock to $265 from $225 and reiterated an Outperform rating. He backs Nvidia to beat consensus expectations of $1.25 in earnings per share and $54.7 billion in sales for the October quarter.

That was echoed by Susquehanna analyst Christopher Rolland, who raised his target price on Nvidia stock to $230 from $210 with a Positive rating.

“We expect better results and guidance as [Nvidia’s] GB300 [hardware] is expected to continue ramping in 2H…AI demand continues to be supported by ever-increasing hyperscale capex plans,” Rolland wrote.

AI startup Anthropic said Wednesday it plans to invest $50 billion in American data-center infrastructure, partnering with cloud-computing company Fluidstack and beginning with sites in Texas and New York. While Anthropic didn’t say what chips it would be using in its data centers, the company has previously said it uses a mix of processors from Nvidia, Amazon.com , and Google.

Write to Adam Clark at adam.clark@barrons.com