Coin World News Report:
On July 8th, the hot topic of artificial intelligence (AI) continues, and almost all analysts on Wall Street hold an optimistic attitude towards NVIDIA. However, Pierre Ferragu, an analyst from New Street Research, has rare downgraded the rating of NVIDIA, believing that unless in a bull market, the future upside is limited, and thus adjusted the rating to “neutral”. Experts warn that this may trigger a bigger crash in the Bitcoin market.
From the beginning of the year to date, NVIDIA’s stock price has risen by 155.52%, closing at $125.83 last weekend, with a market value exceeding $3.1 trillion, surpassing Apple and Microsoft, and becoming the company with the largest market value globally.
However, Pierre Ferragu, an analyst from New Street Research, has downgraded NVIDIA’s rating from “buy” to “neutral”.
He explained that NVIDIA has risen by nearly 240% in 2023, and after soaring 154% this year, it has reached full valuation. He believes that NVIDIA’s rapid rise since the beginning of last year has reached a point where it has no further room to climb.
He pointed out that the only possible upside exists in a bull market, with a significant improvement in prospects after 2025, but there is currently not enough confidence in this. He also emphasized that although NVIDIA’s brand quality remains unchanged, its brand valuation may face downward risks if the current market situation does not improve.
However, Bloomberg data shows that nearly 90% of analysts still recommend buying NVIDIA stocks, making Ferragu’s rating downgrade particularly unique. However, it is undeniable that NVIDIA’s current trading price is more than 22 times the expected revenue for the next 12 months, making it the most expensive stock in the S&P 500 index, and valuation issues have therefore been frequently discussed.
New Street Research ultimately set NVIDIA’s one-year target price at $135 per share, 4% lower than the company’s historical high of $140.76, but 7.3% higher than the closing price of $125.83 last Friday.
CoinDesk previously pointed out that the highly synchronized fluctuations between Bitcoin and NVIDIA have caused concerns among market experts. Experts believe that if the AI bubble bursts, it may drag down the cryptocurrency market.
From March 15th to the beginning of the year, Bitcoin rose by 60%, while NVIDIA rose by 77.5%. The 90-day correlation coefficient between the two had risen to 0.86, the highest level since May 2023.
A correlation coefficient exceeding 0.8 indicates a high correlation between Bitcoin and NVIDIA, tending to fluctuate synchronously. Therefore, if NVIDIA’s stock price starts to plummet, there is a high possibility that Bitcoin will also decline in sync.
However, it is worth noting that these data occurred before March of this year. Since then, NVIDIA has continued to hit new highs, while Bitcoin has stagnated and retraced more than 26% from its peak under negative news such as the German government and the repayment of the former largest cryptocurrency exchange Mt.Gox.
This implies that there are signs of a slight decline in the correlation between Bitcoin and NVIDIA, and it remains to be seen whether they will stabilize again in the future.
