Wall Street analyst downgrades Nvidia stock amid lower Blackwell margins

The share price of Nvidia (NASDAQ: NVDA) has received a rare downgrade, with analysts pointing to the chipmaker’s potentially tempered near-term margins.

Specifically, Nvidia received a cautious downgrade from Phillip Securities, which revised its rating from ‘Buy’ to ‘Accumulate.’

Investment management firm analyst Yik Ban Chong downgraded Nvidia despite its strong third-quarter performance for fiscal year 2025. However, the analyst expressed concerns over the lower initial gross margins anticipated for Nvidia’s next-generation Blackwell chip series.

Set to begin production in Q4 2025, Blackwell’s initial gross margins are expected to range in the “moderate to low-70s,” below Nvidia’s typical levels. 

While margins are projected to improve to the mid-70s as production scales, the short-term profitability pressures have tempered investor sentiment.

Despite the downgrade, Phillip Securities raised its price target for Nvidia from $155 to $160, reflecting confidence in its long-term growth potential.

“We are downgrading NVDA to Accumulate from Buy due to recent price movements, though we raise our price target to $160 (previously $155).<…> Margin assumptions for FY26e have been lowered in line with management guidance for Blackwell’s lower margins,” Chong said. 

At the same time, the analyst revised Nvidia’s FY26 revenue and PATMI (Profit After Tax and Minority Interests) forecasts upward by 5% and 7%, respectively. 

This adjustment was driven by the anticipated strong ramp-up of Nvidia’s Blackwell and Hopper platforms and favorable corporate tax assumptions.

Blackwell chips concerns 

Interestingly, concerns about the Blackwell chips on the initial delay and reported overheating issues have recently emerged. These issues could significantly impact NVDA’s outlook; however, during the Q3 earnings report, Nvidia clarified that there were no problems with the chip.

Nvidia assured investors that Blackwell is in “full production” and progressing at “full steam,” with plans to ramp up shipments each quarter. 

CFO Colette Kress reported that 13,000 Blackwell samples were shipped this quarter, while CEO Jensen Huang highlighted the chip’s early success, stating that it has already generated billions in revenue.

Following the earnings report, other Wall Street analysts have also issued bullish outlooks for Nvidia’s stock. For instance, in a November 21 investor note, Rosenblatt Securities’ Hans Mosesmann maintained a Buy rating and raised the price target from $200 to $220. Similarly, Cody Acree of Benchmark Capital reiterated a Buy rating, increasing his price forecast from $170 to $190.

Despite Nvidia’s impressive growth in 2024, concerns persist about potential headwinds in the coming months. As reported by Finbold, Blue Chip, technical analyst Larry Tentarelli noted that Nvidia’s massive $3.6 trillion valuation might hinder further stock growth. The expert suggested the company might lose ground to other lowly valued AI stocks. 

Nonetheless, Tentarelli suggested the stock could rally to $175 if it establishes a price above the $152 resistance.

NVDA price analysis 

At press time, Nvidia (NVDA) was trading at $145.67, down approximately 0.68% over the past 24 hours. This continued the volatility seen since the earnings report. On a year-to-date basis, the stock has surged over 200%. 

In summary, despite near-term margin concerns, Nvidia’s strong performance, innovative pipeline, and bullish long-term outlook affirm its growth potential amid short-term volatility.

Featured image via Shutterstock