Nvidia gets rare downgrade from small firm worried about slowing data center growth

Recent hiccups for Nvidia could be the start of broader weakness for the artificial intelligence boom, and investors should consider dialing back their exposure to the stock, according to one small equity research shop. Elazar Advisors downgraded the chipmaker to neutral from buy. Analyst Chaim Siegel said in a note to clients that, while he still believes in the AI story long-term, there are some signs of weakness in the data center business that give reason to be cautious. “Now we’ve seen four quarters of decel in the sequential datacenter growth. Off of huge numbers that’s fine. But last quarter sequential growth slowed again and now I’m concerned that it can continue to slow in Q3 and Q4. As customers wait for Blackwell, and Blackwell may not be in full-quarter ramp until Q1, there may be continued slowdown for the overall datacenter business,” the note said. Nvidia’s emergence as one of the world’s most important companies has been tied to the excitement around AI, with the idea being that Nvidia’s advanced semiconductors are needed for the massive computing power required by the recent technological breakthroughs. Elazar is not completely alone in being skeptical of Nvidia, but it’s definitely a contrarian stance. Of the 64 analysts tracked by LSEG, 58 have buy or strong buy ratings on Nvidia, with the remaining six having hold ratings. Nvidia’s stock is up 700% since the start of 2023, so being bullish has been the right call for Wall Street analysts. However, the stock has slipped 4.6% over the past three months. NVDA YTD mountain Nvidia’s rally has stalled in recent months.